QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April
30, 2016

or

¨

TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to
_____

Commission File Number: 001-33706

URANIUM
ENERGY CORP.

(Exact name of registrant as specified in its charter)

Nevada

98-0399476

(State or other jurisdiction of incorporation of organization)

(I.R.S. Employer Identification No.)

1030 West Georgia Street, Suite 1830, Vancouver,
B.C.

V6E 2Y3

(Address of principal executive offices)

(Zip Code)

(604)
682-9775

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and
former fiscal year, if changed since last report)

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions
of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.

¨ Large accelerated
filer

x Accelerated filer

¨ Non-accelerated
filer (Do not check if a smaller reporting company)

¨ Smaller reporting company

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable date: 116,414,054 shares of common stock outstanding
as of June 6, 2016.

The accompanying notes are an integral
part of these condensed consolidated financial statements

7

URANIUM
ENERGY CORP.

CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Accumulated

Other

Common Stock

Additional Paid-

Accumulated

Comprehensive

Stockholders'

Shares

Amount

in Capital

Deficit

Loss

Equity

Balance, July 31, 2015

97,834,087

$

97,841

$

222,927,529

$

(192,024,074

)

$

(14,631

)

$

30,986,665

Common stock

Issued for equity financing, net of issuance costs

12,364,704

12,365

9,972,152

-

-

9,984,517

Issued for exercise of stock options

682,167

682

224,433

-

-

225,115

Issued for credit facility

1,711,933

1,712

1,698,288

-

-

1,700,000

Issued for asset acquisition

1,333,560

1,334

1,225,541

-

-

1,226,875

Issued for settlement of current liabilities

487,574

487

452,957

-

-

453,444

Stock-based compensation

Common stock issued for consulting services

1,370,843

1,370

1,336,721

-

-

1,338,091

Common stock issued for compensation

307,787

302

279,028

-

-

279,330

Stock options issued to consultants

-

-

66,317

-

-

66,317

Stock options issued to management

-

-

640,789

-

-

640,789

Stock options issued to employees

-

-

163,124

-

-

163,124

Warrants extension for mineral property

-

-

14,155

-

-

14,155

Warrants extension for credit facility

-

-

104,915

-

-

104,915

Net loss for the period

-

-

-

(13,552,594

)

-

(13,552,594

)

Other comprehensive loss

-

-

-

-

(282

)

(282

)

Balance, April 30, 2016

116,092,655

$

116,093

$

239,105,949

$

(205,576,668

)

$

(14,913

)

$

33,630,461

The accompanying notes are an integral
part of these condensed consolidated financial statements

8

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

NOTE 1:

NATURE
OF OPERATIONS AND GOING CONCERN

Uranium Energy Corp. was incorporated
in the State of Nevada on May 16, 2003. Uranium Energy Corp. and its subsidiary companies and a controlled partnership (collectively,
the “Company”) are engaged in uranium mining and related activities, including exploration, pre-extraction, extraction
and processing of uranium concentrates, on projects located in the United States and Paraguay.

Although planned principal operations
have commenced from which significant revenues from sales of uranium concentrates were realized for the fiscal years ended July
31, 2015 (“Fiscal 2015”), 2013 (“Fiscal 2013”) and 2012 (“Fiscal 2012”), the Company has yet
to achieve profitability and has had a history of operating losses resulting in an accumulated deficit balance since inception.
No revenue from uranium sales was realized for the nine months ended April 30, 2016 and the fiscal year ended July 31, 2014 (“Fiscal
2014”). Historically, the Company has been reliant primarily on equity financings from the sale of its common stock and,
during Fiscal 2014 and Fiscal 2013, on debt financing in order to fund its operations, and this reliance is expected to continue
for the foreseeable future.

At April 30, 2016, the Company had a working
capital of $9.0 million including cash and cash equivalents of $10.1 million. As the Company does not expect to achieve and maintain
profitability in the near term, the continuation of the Company as a going concern is dependent upon its ability to obtain adequate
additional financing which the Company has successfully secured since its inception, including those from asset divestitures.
However, there is no assurance that the Company will be successful in securing any form of additional financing in the future
when required and on terms favorable to the Company; therefore substantial doubt exist as to whether the Company’s cash
resources and working capital will be sufficient to enable the Company to continue as a going concern for the next twelve months.
The continued operations of the Company, including the recoverability of the carrying values of its assets, are dependent ultimately
on the Company’s ability to achieve and maintain profitability and positive cash flow from its operations.

These consolidated financial statements
have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and
liabilities that may be necessary in the event the Company can no longer continue as a going concern.

NOTE 2:

BASIS
OF PRESENTATION

The accompanying unaudited interim condensed
consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with U.S. generally accepted
accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the
information and footnotes required under U.S. GAAP for complete financial statements. These unaudited interim condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s
Annual Report on Form 10-K for the fiscal year ended July 31, 2015. In the opinion of management, all adjustments of a normal
recurring nature and considered necessary for a fair presentation have been made. Operating results for the nine months ended
April 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2016.

Certain comparative figures have been
reclassified to conform to the current year’s presentation.

Exploration Stage

The Company has established
the existence of mineralized materials for certain uranium projects, including the Palangana Mine. The Company has not established
proven or probable reserves, as defined by the United States Securities and Exchange Commission (the “SEC”) under
Industry Guide 7, through the completion of a “final” or “bankable” feasibility study for any of its uranium
projects, including the Palangana Mine. Furthermore, the Company has no plans to establish proven or probable reserves for any
of its uranium projects for which the Company plans on utilizing in-situ recovery (“ISR”) mining, such as the Palangana
Mine. As a result, and despite the fact that the Company commenced extraction of mineralized materials at the Palangana Mine in
November 2010, the Company remains in the Exploration Stage as defined under Industry Guide 7, and will continue to remain in
the Exploration Stage until such time proven or probable reserves have been established.

9

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

Since the Company commenced extraction
of mineralized materials at the Palangana Mine without having established proven or probable reserves, any mineralized materials
established or extracted from the Palangana Mine should not in any way be associated with having established or produced from
proven or probable reserves.

In accordance with U.S. GAAP, expenditures
relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures
are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves.
Expenditures relating to exploration activities such as drill programs to establish mineralized materials are expensed as incurred.
Expenditures relating to pre-extraction activities such as the construction of mine wellfields, ion exchange facilities and disposal
wells are expensed as incurred until such time proven or probable reserves are established for that project, after which expenditures
relating to mine development activities for that particular project are capitalized as incurred.

Companies in the Production Stage as defined
under Industry Guide 7, having established proven and probable reserves and exited the Exploration Stage, typically capitalize
expenditures relating to ongoing development activities, with corresponding depletion calculated over proven and probable reserves
using the units-of-production method and allocated to future reporting periods to inventory and, as that inventory is sold, to
cost of goods sold. The Company is in the Exploration Stage which has resulted in the Company reporting larger losses than if
it had been in the Production Stage due to the expensing, rather than capitalization, of expenditures relating to ongoing mill
and mine development activities. Additionally, there would be no corresponding amortization allocated to future reporting periods
of the Company since those costs would have been expensed previously, resulting in both lower inventory costs and cost of goods
sold and results of operations with higher gross profits and lower losses than if the Company had been in the Production Stage.
Any capitalized costs, such as expenditures relating to the acquisition of mineral rights, are depleted over the estimated extraction
life using the straight-line method. As a result, the Company’s consolidated financial statements may not be directly comparable
to the financial statements of companies in the Production Stage.

Recently Issued Accounting Pronouncement

In March 2016, the Financial Accounting
Standards Board issued Accounting Standards Update No. 2016-09, Improvement to Employee Share-Based Payment Accounting (“ASU
2016-09”) as part of its simplification initiative. ASU 2016-09 allows an entity to make an entity-wide accounting policy
election to either estimate the number of awards that are expected to vest (current U.S. GAAP) or account for forfeitures when
they occur. For public business entities, ASU 2016-09 is effective for annual periods ending after December 15, 2016, and interim
periods thereafter, with early adoption permitted. The Company plans to make an election to account for forfeitures when they
occur for the fiscal year ending July 31, 2017, and doesn’t expect that this election would have a significant impact on
the Company’s consolidated financial statements.

10

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

NOTE 3:

MINERAL
RIGHTS AND PROPERTIES

Mineral Rights

At April 30, 2016, the Company had mineral
rights in the States of Arizona, Colorado, New Mexico, Texas and Wyoming and in the Republic of Paraguay. These mineral rights
were acquired through staking, purchase or lease agreements and are subject to varying royalty interests, some of which are indexed
to the sale price of uranium. At April 30, 2016, annual maintenance payments of approximately $2,500,000 were required to maintain
these mineral rights.

Mineral rights and property acquisition costs consisted of
the following:

April 30, 2016

July 31, 2015

Mineral Rights and Properties

Palangana Mine

$

6,562,348

$

6,587,135

Goliad Project

8,689,127

8,689,127

Burke Hollow Project

1,495,750

1,495,750

Longhorn Project

116,870

116,870

Salvo Project

14,905

14,905

Nichols Project

154,774

154,774

Anderson Project

9,154,268

9,154,268

Workman Creek Project

1,472,008

1,472,008

Los Cuatros Project

257,250

257,250

Slick Rock Project

615,650

661,271

Yuty Project

11,947,144

11,947,144

Coronel Oviedo Project

1,133,412

1,133,412

Other Property Acquisitions

244,827

285,741

41,858,333

41,969,655

Accumulated Depletion

(3,929,884

)

(3,929,884

)

37,928,449

38,039,771

Databases

2,410,038

2,410,038

Accumulated Amortization

(2,314,890

)

(2,166,966

)

95,148

243,072

Land Use Agreements

404,310

390,155

Accumulated Amortization

(264,821

)

(235,031

)

139,489

155,124

$

38,163,086

$

38,437,967

The Company has not established proven
or probable reserves, as defined by the SEC under Industry Guide 7, for any of its mineral projects. The Company has established
the existence of mineralized materials for certain uranium projects, including the Palangana Mine. Since the Company commenced
uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent
uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.

During the nine months ended April 30,
2016, the asset retirement obligations (“ARO”) of the Palangana Mine were revised due to changes in the estimated
timing of restoration and reclamation of the Palangana Mine, resulting in the corresponding mineral rights and properties being
reduced by $24,787, and a credit amount of re-valuation of ARO totaling $184,381 being recorded against the mineral property expenditures
for the Palangana Mine. Refer to Note 9. Asset Retirement Obligations.

11

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

During the nine months ended April 30,
2016, the Company abandoned certain mineral interests at projects located in Colorado and New Mexico having a combined acquisition
cost of $86,535. As a result, an impairment loss on mineral properties of $86,535 was reported on the consolidated statement of
operations for the nine months ended April 30, 2016.

During the three and nine months ended
April 30, 2016, the Company continued with the strategic plan for reduced operations implemented in Fiscal 2014 and further reduced
operations at the Palangana Mine to capture residual uranium only. As a result, no depletion for the Palangana Mine was recorded
on the Company’s consolidated financial statements for the three and nine months ended April 30, 2016.

Mineral property expenditures incurred
by major projects were as follows:

Three Months Ended April 30,

Nine Months Ended April 30,

2016

2015

2016

2015

Mineral Property Expenditures

Palangana Mine

$

280,345

$

500,535

$

1,031,625

$

1,621,391

Goliad Project

26,848

25,631

71,679

79,924

Burke Hollow Project

48,409

94,702

974,661

1,235,250

Longhorn Project

247

22,276

4,620

52,999

Salvo Project

4,622

16,751

21,697

39,590

Anderson Project

3,564

50,142

170,780

173,564

Workman Creek Project

418

-

32,109

31,300

Slick Rock Project

-

2,924

53,861

52,708

Yuty Project

89,246

41,274

291,788

301,035

Coronel Oviedo Project

136,031

132,315

422,763

428,077

Other Mineral Property Expenditures

136,238

159,292

517,611

544,403

Re-valuation of Asset Retirement Obligations

-

-

(184,381

)

-

$

725,968

$

1,045,842

$

3,408,813

$

4,560,241

NOTE 4:

PROPERTY,
PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

April 30, 2016

July 31, 2015

Accumulated

Net Book

Accumulated

Net Book

Cost

Depreciation

Value

Cost

Depreciation

Value

Hobson Processing Facility

$

6,819,088

$

(773,933

)

$

6,045,155

$

6,819,088

$

(773,933

)

$

6,045,155

Mining Equipment

2,440,105

(2,202,485

)

237,620

2,452,572

(2,019,996

)

432,576

Logging Equipment and Vehicles

1,962,895

(1,785,206

)

177,689

1,962,895

(1,714,908

)

247,987

Computer Equipment

585,434

(549,175

)

36,259

615,064

(573,355

)

41,709

Furniture and Fixtures

172,215

(167,598

)

4,617

182,802

(176,726

)

6,076

Land

519,520

-

519,520

175,144

-

175,144

$

12,499,257

$

(5,478,397

)

$

7,020,860

$

12,207,565

$

(5,258,918

)

$

6,948,647

During the three and nine months ended
April 30, 2016, no uranium concentrate was processed at the Hobson Processing Facility due to the further reduced operations at
the Palangana Mine. As a result, no depreciation for the Hobson Processing Facility was recorded on the consolidated financial
statements for the three and nine months ended April 30, 2016.

12

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

NOTE
5:

RECLAMATION
DEPOSITS

Reclamation deposits include interest
and non-interest bearing deposits issued in the States of Arizona, Texas and Wyoming relating to exploration, pre-extraction,
extraction and reclamation activities in the respective states where the deposits are held.

Reclamation deposits consisted of the
following:

April 30, 2016

July 31, 2015

Palangana Mine

$

1,102,981

$

1,102,981

Hobson Processing Facility

587,228

587,228

Arizona

15,000

15,000

Wyoming

817

816

$

1,706,026

$

1,706,025

NOTE
6:

OTHER
LONG-TERM ASSET AND LIABILITY

On March 4, 2016, the Company entered
into a share purchase and option agreement (the “SPOA”) with CIC Resources Inc. (the “Vendor”) pursuant
to which the Company acquired (the “Acquisition”) all of the issued and outstanding shares of JDL Resources Inc. (“JDL”),
a wholly-owned subsidiary of the Vendor, and was granted an option to acquire all of the issued and outstanding shares of CIC
Resources (Paraguay) Inc. (“CIC”; the “Option”), another wholly-owned subsidiary of the Vendor. JDL’s
principal assets include a piece of land located in the department of Alto Parana in the Republic of Paraguay. CIC is the
beneficial owner of Paraguay Resources Inc. which is the 100% owner of certain mineral property concessions (the “Property”),
which are located in the departments of Alto Parana and Canindeyú in the Republic of Paraguay.

Pursuant to the SPOA, the Company issued
1,333,560 restricted common shares in the capital of the Company and paid $50,000 in cash to complete the Acquisition. If the
Company has paid or caused to have paid on the Vendor’s behalf certain maintenance payments and assessment work required
to keep the Property in good standing as directed by the Vendor, during the one-year period following completion of the Acquisition
(the “Option Period”), the Company may elect in its discretion to exercise the Option at any time, or if, in accordance
with the SPOA, the Vendor satisfied certain conditions precedent to exercise, the Company will be deemed to have exercised the
Option. Upon exercise of the Option the Company is required to pay, subject to certain adjustments, $250,000 in cash to
the Vendor and to grant to the Vendor a 1.5% net smelter returns royalty (the “Royalty”) on the Property as contemplated
by a proposed net smelter returns royalty agreement (the “Royalty Agreement”) to be executed by the parties upon exercise
of the Option. Pursuant to the proposed Royalty Agreement, the Company has the right, exercisable at any time for a period
of six years following exercise of the Option, to acquire one-half percent (0.5%) of the Royalty at a purchase price of $500,000.

In accordance with Accounting Standard
Codification (“ASC”) 360, Property, Plant and Equipment, the acquisition of JDL was accounted for as an asset acquisition
as it was determined that JDL’s operations do not meet the definition of a business as defined in ASC 805 Business Combinations.

13

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

The fair value of the consideration paid
and its allocation to the identifiable assets acquired and liabilities assumed are summarized as follows:

Consideration paid

1,333,560 UEC common shares at $0.92 per share

$

1,226,875

Cash consideration

50,000

Cash payable upon exercise the Option

250,000

Transaction costs

63,090

$

1,589,965

Assets acquired and liabilities assumed

Cash and cash equivalents

$

3,916

Prepaid expenses

3,804

Land

344,376

Other long-term asset (Option to acquire CIC)

1,553,388

Due to CIC

(315,519

)

$

1,589,965

The Company holds a variable interest
in CIC as a result of the Option; however, it is not the primary beneficiary due to the fact that the Company does not have the
power over decisions that significantly affect CIC’s economic performance. Accordingly, UEC does not consolidate the results
of CIC. Therefore, the other long-term asset effectively represents the amount paid in advance ($1,303,388) and to be paid upon
the exercise of the option ($250,000) for the acquisition of CIC.

The Company’s maximum exposure to
loss from the unconsolidated variable interest entity at April 30, 2016, which would arise if UEC is unable to exercise the Option,
was approximately $1.3 million, representing the value of the Option (allocated fair value of $1,553,388), net of cash payable
of $250,000 upon exercise of the Option.

The $250,000 cash payment which UEC will
be required to make upon exercise of the Option has been recorded as a liability within Accounts Payable and Accrued Liabilities,
and included in the consideration paid as it was determined to be probably that this payment will be made.

The liability of $315,519 represents the
net amount due from JDL and its subsidiary to CIC and its subsidiary (formerly these entities were both part of the Vendor’s
consolidated group). The amount has been classified as non-current as it has no stated terms of interest or repayment, and not
expected to be settled within the next twelve months.

NOTE
7:

DUE
TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

During the three and nine months ended
April 30, 2016, the Company incurred $30,134 and $128,727 (three and nine months ended April 30, 2015: $45,443 and $118,101),
respectively, in general and administrative costs paid to a company controlled by a direct family member of a director and officer
of the Company.

During the three months ended April 30,
2016, the Company issued 117,998 restricted common shares with a fair value of $109,738 as settlement of amounts owed to this
company totaling $98,371. As a result, a loss on settlement of current liabilities of $11,367 was recognized in the condensed
consolidated statements of operations and comprehensive loss. During the nine months ended April 30, 2015, the Company issued
15,000 restricted shares of common stock with a fair value of $18,150 to this company for consulting services included in general
and administrative costs.

14

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

At April 30, 2016, amounts owed to related
parties totaled $897 (July 31, 2015: $14,660). These amounts are unsecured, non-interest bearing and due on demand.

NOTE
8:

LONG-TERM
DEBT

On February 9, 2016, the Company entered
into a second amended and restated credit agreement (the “Second Amended and Restated Credit Agreement”) with its
lenders, Sprott Resource Lending Partnership, CEF (Capital Markets) Limited and Resource Income Partners Limited Partnership (collectively,
the “Lenders”), whereby the Company and the Lenders agreed to certain further amendments to the $20,000,000 senior
secured credit facility (the “Credit Facility”), including the following terms:

·

extension
of the maturity date from July 31, 2017 to January 1, 2020;

·

deferral
of the monthly principal payments (each of which is equal to one-twelfth of the principal
balance then outstanding) commencement date from July 31, 2016 to February 1, 2019;

·

re-pricing
and extension of the existing bonus warrants comprised of 2,600,000 share purchase warrants,
each warrant exercisable for one share of common stock of the Company at an exercise
price reduced from $2.50 to $1.35 per share until expiry, extended by a further one and
a half years from July 30, 2018 to January 30, 2020, subject to accelerated exercise
whereby, upon notification by the Company, the warrant holders will have 30 days to exercise
their warrants should the ten trading-day volume-weighted average price of the Company’s
shares equal or exceed $2.70;

·

issuance
of second extension fee shares equal to 4% of the principal balance outstanding or $800,000
paid to the Lenders by way of the issuance of 959,613 shares of common stock of the Company
with a price per share based on a 10% discount to the five trading-day volume-weighted
average price of the Company’s shares;

·

payment
of second extension anniversary fees to the Lenders on each of February 1, 2017, 2018
and 2019, of 5.5%, 4.5% and 4.5%, respectively, of the principal balance then outstanding,
if any, payable at the option of the Company in cash or shares of the Company with a
price per share calculated as a 10% discount to the five trading-day volume-weighted
average price of the Company’s shares immediately prior to the applicable date;
and

·

maintenance
at all times of a working capital ratio of not less than 1:1. Working capital ratio is
calculated by dividing current assets by current liabilities, excluding the effects of
principal payments on the determination of working capital.

Under the terms of the Second Amended
and Restated Credit Agreement, the non-revolving Credit Facility has an interest rate of 8% per annum, with the underlying effective
interest rate being 14.28%.

The Second Amended and Restated Credit
Agreement supersedes, in their entirety, the prior Amended and Restated Credit Agreement dated and effective March 13, 2014 and
the prior Credit Agreement dated and effective July 30, 2013.

The incremental value associated with
the re-pricing and extension of the bonus warrants was determined to be $104,915 and has been recorded as an additional discount
on long-term debt. The incremental value was determined using the Black-Scholes option pricing model with the following assumptions:

Expected Life in Years

3.98

Expected Annual Volatility

71.10

%

Expected Risk Free Interest Rate

1.00

%

Expected Dividend Yield

0.00

%

15

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

As at April 30, 2016, long-term debt consisted
of the following:

April 30, 2016

July 31, 2015

Principal amount

$

20,000,000

$

20,000,000

Unamortized discount

(1,086,630

)

(242,522

)

Long-term debt, net of unamortized discount

18,913,370

19,757,478

For the three and nine months ended April
30, 2016 and 2015, the amortization of debt discount totaled $277,417 and $960,807 (three and nine months ended April 30, 2015:
$336,362 and $994,668), respectively, which was recorded as interest expense and included in the condensed consolidated statements
of operations and comprehensive loss.

During the nine months ended April 30,
2016, prior to the execution of the Second Amended and Restated Credit Agreement, and pursuant to the terms of the Amended and
Restated Credit Agreement dated and effective March 13, 2014, the Company paid bonus shares to its lenders through the issuance
of 752,320 restricted shares with a fair value of $900,000, representing 4.5% of the $20,000,000 principal balance outstanding
at July 31, 2015, which was recorded as a discount on long-term debt to be amortized using the effective interest rate over the
life of the long-term debt.

The aggregate yearly maturities of long-term debt based on
principal amounts outstanding at April 30, 2016 are as follows:

Fiscal 2016

$

-

Fiscal 2017

-

Fiscal 2018

-

Fiscal 2019

10,000,000

Fiscal 2020

10,000,000

Total

$

20,000,000

NOTE
9:

ASSET
RETIREMENT OBLIGATIONS

The Company’s asset retirement obligations
relate to future remediation and decommissioning activities at the Palangana Mine and Hobson Processing Facility.

Balance, July 31, 2015

$

3,926,846

Revision in estimate of asset retirement obligations

(209,168

)

Accretion

214,395

Balance, April 30, 2016

$

3,932,073

During the nine months ended April 30,
2016, the ARO for the Palangana Mine were revised due to changes in the estimated timing of restoration and reclamation of the
Palangana Mine. As a result, ARO liabilities associated with the Palangana Mine were reduced by $209,168, the corresponding mineral
rights and properties were reduced by $24,787, and a credit amount of re-valuation of ARO totaling $184,381 was recognized as
a result of a downward adjustment to fully depleted underlying mineral rights and properties, which was recorded against the mineral
property expenditures for the Palangana Mine.

16

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

The estimated amounts and timing of cash
flows and assumptions used for ARO estimates are as follows:

April 30, 2016

July 31, 2015

Undiscounted amount of estimated cash flows

$

6,650,255

$

6,600,868

Payable in years

2.1 to 15

2.5 to 15

Inflation rate

0.90% to 2.25

%

2.02% to 2.25

%

Discount rate

5.15% to 8.00

%

6.56% to 8.00

%

The undiscounted amounts of estimated
cash flows for the next five fiscal years and beyond are as follows:

Fiscal 2016

$

-

Fiscal 2017

139,052

Fiscal 2018

414,058

Fiscal 2019

667,984

Fiscal 2020

620,673

Remaining balance

4,808,488

$

6,650,255

NOTE
10:

CAPITAL
STOCK

Equity Financing

During Fiscal 2014, the Company filed
a Form S-3 “Shelf” Registration Statement effective January 10, 2014 (the “2014 Shelf”) providing for
the public offer and sale of certain securities of the Company from time to time, at its discretion, up to an aggregate offering
of $100 million.

On March 10, 2016, the Company completed
a registered offering of 12,364,704 units at a price of $0.85 per unit for gross proceeds of $10,510,000 pursuant to a prospectus
supplement to the 2014 Shelf. Each unit is comprised of one share of the Company and half of one share purchase warrant, with
each whole warrant being exercisable at a price of $1.20 to purchase one share of the Company totaling 6,182,351 for a three year
period from the date of issuance. The Company issued share purchase warrants to agents as part of share issuance costs to purchase
411,997 shares of the Company exercisable at a price of $1.20 per share also for a three year period from the date of issuance.

The shares were valued at the Company’s
closing price of $0.81 per share at March 10, 2016. The share purchase warrants were valued using the Black-Scholes option pricing
model with the following assumptions:

Expected Risk Free Interest Rate

1.11

%

Expected Annual Volatility

74.34

%

Expected Contractual Life in Years

3.00

Expected Annual Dividend Yield

0.00

%

17

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

The net proceeds from the 2014 Shelf equity
financing were allocated to the fair values of the shares and share purchase warrants as presented below:

Fair Value of Shares

$

10,015,410

Fair Value of Share Purchase Warrants

1,938,995

Total Fair Value Before Allocation to Net Proceeds

$

11,954,405

Gross Proceeds

$

10,510,000

Share Issuance Costs - Cash

(525,482

)

Net Cash Proceeds Received

$

9,984,518

Relative Fair Value Allocation to:

Shares

$

8,365,038

Share Purchase Warrants

1,619,480

$

9,984,518

At April 30, 2016, a total of $35.1 million
of the 2014 Shelf was utilized through the following registered offerings and sales of units, with a remaining available balance
of $64.9 million under the 2014 Shelf.

·

on
June 25, 2015: $10.0 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $6.7 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full; and

·

on
March 10, 2016: $10.5 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $7.9 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full.

Share Transactions

A summary of the Company’s share transactions for the
three and nine months ended April 30, 2016 are as follows:

Common

Value per Share

Issuance

Period / Description

Shares Issued

Low

High

Value

Balance, July 31, 2015

97,834,087

Bonus Shares for Credit Facility

752,320

$

1.20

$

1.20

$

900,000

Consulting Services

274,982

1.03

1.38

305,594

Share Compensation

33,315

1.00

1.12

35,264

Balance, October 31, 2015

98,894,704

Consulting Services

581,421

0.72

1.12

608,179

Share Compensation

71,588

1.06

1.08

76,236

Options Exercised

682,167

0.33

0.33

225,115

Balance, January 31, 2016

100,229,880

Second Extension Fee Shares for Credit Facility

959,613

0.83

0.83

800,000

Settlement of Current Liabilities

487,574

0.93

0.93

453,444

Equity Financing

12,364,704

0.85

0.85

10,510,000

Asset Acquisition

1,333,560

0.92

0.92

1,226,875

Consulting Services

514,440

0.73

0.93

424,316

Share Compensation

202,884

0.75

0.96

167,830

Balance, April 30, 2016

116,092,655

18

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

Share Purchase Warrants

A summary of share purchase warrants outstanding and exercisable
at April 30, 2016 are as follows:

Weighted Average Exercise Price

Number of Warrants Outstanding

Expiry Date

Weighted Average Remaining Contractual Life (Years)

$

1.20

6,594,348

March 10, 2019

2.86

1.35

2,600,000

January 30, 2020

3.75

1.95

50,000

June 3, 2018

2.09

2.12

2,850,000

June 25, 2018

2.15

2.60

1,859,524

October 23, 2016

0.48

$

1.61

13,953,872

2.56

Stock Options

At April 30, 2016, the Company had one
stock option plan, the 2015 Stock Incentive Plan (the “2015 Plan”). The 2015 Plan provides for up to 9,600,250 shares
of the Company that may be issued pursuant to awards that may be granted together with an additional 10,569,301 shares of the
Company that may be issued pursuant to stock options previously granted under the Company’s prior 2014 Stock Incentive Plan
(the “2014 Plan”). The 2015 Plan supersedes and replaces the Company’s prior 2014 Plan, which superseded and
replaced the Company’s prior 2013, 2009 and 2006 Stock Incentive Plans, such that no further shares are issuable under those
prior plans.

A summary of stock options granted by
the Company during the nine months ended April 30, 2016, including corresponding grant date fair values and assumptions using
the Black Scholes option pricing model is as follows:

Options

Exercise

Term

Fair

Expected

Risk-Free

Dividend

Expected

Date

Issued

Price

(Years)

Value

Life (Years)

Interest Rate

Yield

Volatility

August 7, 2015

105,000

$

1.32

5

$

68,824

2.90

1.04

%

0.00

%

77.17

%

October 14, 2015

1,000,000

1.14

5

563,195

2.90

0.81

%

0.00

%

77.01

%

January 12, 2016

300,000

0.98

5

145,902

2.90

1.15

%

0.00

%

76.96

%

Total

1,405,000

$

777,921

A continuity schedule of outstanding stock
options for the underlying common shares for the nine months ended April 30, 2016 is as follows:

Number of Stock Options

Weighted Average Exercise Price

Balance, July 31, 2015

10,581,975

$

1.38

Issued

1,105,000

1.16

Forfeited

(5,000

)

1.32

Balance, October 31, 2015

11,681,975

1.36

Issued

300,000

0.98

Exercised

(682,167

)

0.33

Forfeited

(180,000

)

1.32

Expired

(1,950

)

5.90

Balance, January 31, 2016

11,117,858

1.42

Forfeited

(72,500

)

1.81

Balance, April 30, 2016

11,045,358

$

1.41

At April 30, 2016, the aggregate intrinsic
value under the provisions of ASC 718 of all outstanding stock options was estimated at $439,068 (vested: $439,068 and unvested:
$Nil).

At April 30, 2016, unrecognized stock-based
compensation expense related to the unvested portion of stock options granted under the Company’s 2015 Plan totaled $226,003
to be recognized over the next 0.76 years.

19

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

A summary of stock options outstanding and exercisable at April
30, 2016 is as follows:

Options Outstanding

Options Exercisable

Weighted

Weighted Average

Weighted

Weighted Average

Average

Remaining

Average

Remaining

Range of

Outstanding at

Exercise

Contractual Term

Exercisable at

Exercise

Contractual Term

Exercise Prices

April 30, 2016

Price

(Years)

April 30, 2016

Price

(Years)

$0.45 to $0.96

1,269,634

$

0.47

1.56

1,269,634

$

0.47

1.56

$0.97 to $2.45

8,840,000

1.35

3.54

8,057,500

1.37

3.44

$2.46 to $5.70

935,724

3.29

4.09

935,724

3.29

4.09

11,045,358

$

1.41

3.36

10,262,858

$

1.44

3.27

Stock-Based Compensation

A summary of stock-based compensation
expense is as follows:

Three Months Ended April 30

Nine Months Ended April 30

2016

2015

2016

2015

Stock-Based Compensation for Consultants

Common stock issued for consulting services

$

470,549

$

502,854

$

1,429,324

$

1,380,279

Stock options issued to consultants

(4,461

)

346,995

66,317

721,430

466,088

849,849

1,495,641

2,101,709

Stock-Based Compensation for Management

Common stock issued to management

45,299

-

81,495

-

Stock options issued to management

195,464

263,306

640,789

1,424,585

240,763

263,306

722,284

1,424,585

Stock-Based Compensation for Employees

Common stock issued to employees

76,299

-

106,602

-

Stock options issued to employees

15,710

204,723

163,124

1,102,250

92,009

204,723

269,726

1,102,250

$

798,860

$

1,317,878

$

2,487,651

$

4,628,544

NOTE
11:

LOSS
PER SHARE

The following table reconciles the weighted
average number of shares used in the calculation of the basic and diluted loss per share:

Three Months Ended April 30,

Nine Months Ended April 30,

2016

2015

2016

2015

Numerator

Net Loss for the Period

$

(3,679,055

)

$

(5,347,729

)

$

(13,552,594

)

$

(17,949,496

)

Denominator

Basic Weighted Average Number of Shares

109,710,985

92,034,908

102,588,834

91,683,568

Dilutive Stock Options and Warrants

-

-

-

-

Diluted Weighted Average Number of Shares

109,710,985

92,034,908

102,588,834

91,683,568

Net Loss per Share, Basic and Diluted

$

(0.03

)

$

(0.06

)

$

(0.13

)

$

(0.20

)

For the three and nine months ended April
30, 2016 and 2015, all outstanding stock options and share purchase warrants were excluded from the calculation of the diluted
loss per share since the Company reported net losses for those periods and their effects would be anti-dilutive.

20

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

NOTE
12:

SEGMENTED
INFORMATION

The Company currently operates in a single
reportable segment and is focused on uranium mining and related activities, including exploration, pre-extraction, extraction
and processing of uranium concentrates.

At April 30, 2016, long-term assets located
in the U.S. totaled $33,436,732, or 69% of the Company’s total long-term assets of $48,443,360.

The table below provides a breakdown of
the Company’s long-term assets by geographic segments:

April 30, 2016

United States

Balance Sheet Items

Texas

Arizona

Other States

Canada

Paraguay

Total

Mineral Rights and Properties

$

13,369,394

$

10,891,861

$

821,276

$

-

$

13,080,555

$

38,163,086

Property, Plant and Equipment

6,648,175

-

-

16,965

355,720

7,020,860

Reclamation Deposits

1,690,209

15,000

817

-

-

1,706,026

Other Long-Term Assets

-

-

-

-

1,553,388

1,553,388

Total Long-Term Assets

$

21,707,778

$

10,906,861

$

822,093

$

16,965

$

14,989,663

$

48,443,360

July 31, 2015

United States

Balance Sheet Items

Texas

Arizona

Other States

Canada

Paraguay

Total

Mineral Rights and Properties

$

13,555,492

$

10,891,861

$

910,059

$

-

$

13,080,555

$

38,437,967

Property, Plant and Equipment

6,926,682

-

-

7,502

14,463

6,948,647

Reclamation Deposits

1,690,209

15,000

816

-

-

1,706,025

Total Long-Term Assets

$

22,172,383

$

10,906,861

$

910,875

$

7,502

$

13,095,018

$

47,092,639

21

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

The tables below provide a breakdown of
the Company’s operating results by geographic segments for the three and nine months ended April 30, 2016. All intercompany
transactions have been eliminated.

Three Months Ended April 30, 2016

United States

Statement of Operations

Texas

Arizona

Other States

Canada

Paraguay

Total

Sales

$

-

$

-

$

-

$

-

$

-

$

-

Costs and Expenses:

Cost of sales

-

-

-

-

-

-

Mineral property expenditures

495,830

3,982

881

-

225,275

725,968

General and administrative

1,426,110

66,534

989

514,853

(3,021

)

2,005,465

Depreciation, amortization and accretion

200,732

-

750

2,385

1,621

205,488

2,122,672

70,516

2,620

517,238

223,875

2,936,921

Loss from operations

(2,122,672

)

(70,516

)

(2,620

)

(517,238

)

(223,875

)

(2,936,921

)

Other income (expenses)

(745,888

)

(4,663

)

-

31

6

(750,514

)

Loss before income taxes

$

(2,868,560

)

$

(75,179

)

$

(2,620

)

$

(517,207

)

$

(223,869

)

$

(3,687,435

)

Three Months Ended April 30, 2015

United States

Statement of Operations

Texas

Arizona

Other States

Canada

Paraguay

Total

Sales

$

-

$

-

$

-

$

-

$

-

$

-

Costs and Expenses:

Cost of sales

-

-

-

-

-

-

Mineral property expenditures

786,935

50,119

35,199

-

173,589

1,045,842

General and administrative

2,400,403

51,889

4,368

707,481

3,755

3,167,896

Depreciation, amortization and accretion

368,448

-

501

2,741

2,392

374,082

3,555,786

102,008

40,068

710,222

179,736

4,587,820

Loss from operations

(3,555,786

)

(102,008

)

(40,068

)

(710,222

)

(179,736

)

(4,587,820

)

Other income (expenses)

(759,273

)

(4,640

)

-

-

169

(763,744

)

Loss before income taxes

$

(4,315,059

)

$

(106,648

)

$

(40,068

)

$

(710,222

)

$

(179,567

)

$

(5,351,564

)

22

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

Nine Months Ended April 30, 2016

United States

Statement of Operations

Texas

Arizona

Other States

Canada

Paraguay

Total

Sales

$

-

$

-

$

-

$

-

$

-

$

-

Costs and Expenses:

Cost of sales

-

-

-

-

-

-

Mineral property expenditures

2,347,348

213,885

133,031

-

714,549

3,408,813

General and administrative

5,074,713

141,526

2,652

1,865,839

1,939

7,086,669

Depreciation, amortization and accretion

667,080

-

2,250

6,017

5,226

680,573

Impairment loss on mineral properties

-

-

86,535

-

-

86,535

8,089,141

355,411

224,468

1,871,856

721,714

11,262,590

Loss from operations

(8,089,141

)

(355,411

)

(224,468

)

(1,871,856

)

(721,714

)

(11,262,590

)

Other income (expenses)

(2,299,582

)

(14,198

)

-

849

17

(2,312,914

)

Loss before income taxes

$

(10,388,723

)

$

(369,609

)

$

(224,468

)

$

(1,871,007

)

$

(721,697

)

$

(13,575,504

)

Nine Months Ended April 30, 2015

United States

Statement of Operations

Texas

Arizona

Other States

Canada

Paraguay

Total

Sales

$

-

$

-

$

-

$

-

$

-

$

-

Costs and Expenses:

Cost of sales

-

-

-

-

-

-

Mineral property expenditures

3,431,826

207,586

191,718

-

729,111

4,560,241

General and administrative

7,456,500

148,766

18,393

2,069,664

18,610

9,711,933

Depreciation, amortization and accretion

1,420,996

-

1,968

9,238

8,606

1,440,808

12,309,322

356,352

212,079

2,078,902

756,327

15,712,982

Loss from operations

(12,309,322

)

(356,352

)

(212,079

)

(2,078,902

)

(756,327

)

(15,712,982

)

Other income (expenses)

(2,249,325

)

(15,018

)

-

(120

)

484

(2,263,979

)

Loss before income taxes

$

(14,558,647

)

$

(371,370

)

$

(212,079

)

$

(2,079,022

)

$

(755,843

)

$

(17,976,961

)

NOTE
13:

SUPPLEMENTAL
CASH FLOW INFORMATION

During the nine months ended April 30,
2016 and 2015, the Company issued 1,370,843 and 891,273 restricted shares with a fair value of $1,338,091 and $1,380,279, respectively,
for consulting services.

During the nine months ended April 30,
2016, the Company issued 307,787 shares with a fair value of $279,330 as compensation to certain management, employees and consultants
of the Company under the 2015 Plan.

During the nine months ended April 30,
2016 and 2015, the Company paid $1,217,778 and $1,213,333, respectively, in cash for interest on its long-term debt.

During the nine months ended April 30,
2016, the Company issued 487,574 shares with a fair value of $453,444 as settlement of certain of the Company’s accounts
payable totaling $406,476.

During the nine months ended April 30,
2016, the Company entered into a SPOA with CIC Resources Inc., pursuant to which the Company acquired all of the issued and outstanding
shares of JDL Resources Inc. As consideration, the Company issued 1,333,560 restricted common shares and paid $50,000 in cash.

23

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

NOTE
14:

COMMITMENTS
AND CONTINGENCIES

The Company is renting or leasing various
office or storage space located in the United States, Canada and Paraguay with total monthly payments of $18,484. Office lease
agreements expire between May 2017 and March 2021 for the United States and Canada.

The aggregate minimum payments over the next five fiscal years
are as follows:

Fiscal 2016

$

55,307

Fiscal 2017

217,867

Fiscal 2018

199,722

Fiscal 2019

88,979

Fiscal 2020

89,614

All subsequent years

59,743

$

711,232

The Company is committed to pay its key
executives a total of $750,000 per year for various management services.

The Company is subject to ordinary routine
litigation incidental to its business. Except as disclosed below, the Company is not aware of any material legal proceedings pending
or that have been threatened against the Company.

On or about March 9, 2011, the Texas Commission
on Environmental Quality (the “TCEQ”) granted the Company’s applications for a Class III Injection Well Permit,
Production Area Authorization and Aquifer Exemption for its Goliad Project. On or about December 4, 2012, the U.S. Environmental
Protection Agency (the “EPA”) concurred with the TCEQ issuance of the Aquifer Exemption permit (the “AE”).
With the receipt of this concurrence, the final authorization required for uranium extraction, the Goliad Project achieved fully-permitted
status. On or about May 24, 2011, a group of petitioners, inclusive of Goliad County, appealed the TCEQ action to the 250th District
Court in Travis County, Texas. A motion filed by the Company to intervene in this matter was granted. The petitioners’
appeal lay dormant until on or about June 14, 2013, when the petitioners filed their initial brief in support of their position.
On or about January 18, 2013, a different group of petitioners, exclusive of Goliad County, filed a petition
for review with the Court of Appeals for the Fifth Circuit in the United States (the “Fifth Circuit”) to appeal the
EPA’s decision. On or about March 5, 2013, a motion filed by the Company to intervene in this matter was granted. The
parties attempted to resolve both appeals, to facilitate discussions and avoid further legal costs. The parties jointly agreed,
through mediation initially conducted through the Fifth Circuit on or about August 8, 2013, to abate the proceedings in the State
District Court. On or about August 21, 2013, the State District Court agreed to abate the proceedings. The EPA subsequently
filed a motion to remand without vacatur with the Fifth Circuit wherein the EPA's stated purpose was to elicit additional public
input and further explain its rationale for the approval. In requesting the remand without vacatur, which would allow the
AE to remain in place during the review period, the EPA denied the existence of legal error and stated that it was unaware of
any additional information that would merit reversal of the AE. The Company and the TCEQ filed a request to the Fifth Circuit
for the motion to remand without vacatur, and if granted, to be limited to a 60-day review period. On December 9, 2013,
by way of a procedural order from a three-judge panel of the Fifth Circuit, the Court granted the remand without vacatur and initially
limited the review period to 60 days. In March of 2014, at the EPA’s request, the Fifth Circuit extended the EPA’s
time period for review and additionally, during that same period, the Company conducted a joint groundwater survey of the site,
the result of which reaffirmed the Company’s previously filed groundwater direction studies. On or about June 17, 2014,
the EPA reaffirmed its earlier decision to uphold the granting of the Company’s existing AE, with the exception of a northwestern
portion containing less than 10% of the uranium resource which was withdrawn, but not denied, from the AE area until additional
information is provided in the normal course of mine development. On or about September 9, 2014, the petitioners filed a status
report with the State District Court which included a request to remove the stay agreed to in August 2013 and to set a briefing
schedule (the “Status Report”). In that Status Report, the petitioners also stated that they had decided not to pursue
their appeal at the Fifth Circuit. The Company continues to believe that the pending appeal is without merit and is
continuing as planned towards uranium extraction at its fully-permitted Goliad Project.

24

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

On or about April 3, 2012, the Company
received notification of a lawsuit filed in the State of Arizona, in the Superior Court for the County of Yavapai, by certain
petitioners (the “Plaintiffs”) against a group of defendants, including the Company and former management and board
members of Concentric Energy Corp. (“Concentric”). The lawsuit asserts certain claims relating to the Plaintiffs’
equity investments in Concentric, including allegations that the former management and board members of Concentric engaged in
various wrongful acts prior to and/or in conjunction with the merger of Concentric. The lawsuit originally further alleged that
the Company was contractually liable for liquidated damages arising from a pre-merger transaction which the Company previously
acknowledged and recorded as an accrued liability, and which portion of the lawsuit was settled in full by a cash payment of $149,194
to the Plaintiffs and subsequently dismissed. The court dismissed several other claims set forth in the Plaintiffs’ initial
complaint, but granted the Plaintiffs leave to file an amended complaint. The court denied a subsequent motion to dismiss
the amended complaint, finding that the pleading met the minimal pleading requirements under the applicable procedural rules.
In October 2013, the Company filed a formal response denying liability for any of the Plaintiffs’ remaining claims.
The court set the case for a four-week jury trial that was to take place in Yavapai County, Arizona, in April 2016. In November
2015, after the completion of discovery, the Company and the remaining defendants filed motions for summary judgment, seeking
to dismiss all of the Plaintiffs’ remaining claims. While those motions were pending, the parties reached a settlement
agreement with respect to all claims asserted by the Plaintiffs in that lawsuit. A formal settlement and release agreement
was subsequently executed, pursuant to which all of the Plaintiffs’ claims in the Arizona lawsuit were dismissed with prejudice.
Pursuant to the terms of the settlement agreement, the Defendants collectively paid $500,000 to the Plaintiffs, of which $50,000
will be paid by the Company.

On June 1, 2015, the Company received
notice that Westminster Securities Corporation (“Westminster”) filed a suit in the United States District Court for
the Southern District of New York, alleging a breach of contract relating to certain four-year warrants issued by Concentric in
December 2008. Although the Concentric warrants expired by their terms on December 31, 2012, Westminster bases its claim
upon transactions allegedly occurring prior to UEC’s merger with Concentric. The Company believes that this claim
lacks merit and intends to vigorously defend the same.

On or about June 29, 2015, Heather M.
Stephens filed a class action complaint against the Company and two of its executive officers in the United States District Court,
Southern District of Texas, with an amended class action complaint filed on November 16, 2015, (the “Securities Case”)
seeking unspecified damages and alleging the defendants violated Section 17(b) of the Securities Act of 1933 and Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934. The Company has filed a motion to dismiss.

On or about September 10, 2015, John Price
filed a stockholder derivative complaint on behalf of the Company against the Company’s Board of Directors, executive management
and three of its vice presidents in the United States District Court, Southern District of Texas, with an amended stockholder
derivative complaint filed on December 4, 2015, (the “Federal Derivative Case”) seeking unspecified damages on behalf
of the Company against the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations
in the Securities Case. The Company has filed a motion to dismiss.

On or about October 2, 2015, Marnie W.
McMahon filed a stockholder derivative complaint on behalf of the Company against the Company’s Board of Directors, executive
management and three of its vice presidents in the District Court of Nevada (the “Nevada Derivative Case”) (collectively
with the Federal Derivative Case, the “Derivative Cases”) seeking unspecified damages on behalf of the Company against
the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations in the Securities
Case. On January 21, 2016, the court granted the Company’s motion to stay the Nevada Derivative Case pending the outcome
of the Federal Derivative Case.

The Company believes that the Securities
Case and the Derivative Cases are without merit and intends to defend vigorously against them.

25

URANIUM
ENERGY CORP.

NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2016

(Unaudited)

The Company’s Board of Directors received
a shareholder demand letter dated September 10, 2015 relating to the allegations in the Securities Case (the “Shareholder
Demand”). The letter demands that the Board of Directors initiate an action against the Company’s Board of Directors
and two of its executive officers to recover damages allegedly caused to the Company. The Board of Directors is reviewing the
Shareholder Demand to determine the appropriate course of action.

At any given time, the Company may enter
into negotiations to settle outstanding legal proceedings and any resulting accruals will be estimated based on the relevant facts
and circumstances applicable at that time. The Company does not expect that such settlements will, individually or
in the aggregate, have a material effect on its financial position, results of operation.

26

Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion
and analysis of the Company’s financial condition and results of operations (“MD&A”) contain forward-looking
statements that involve risks, uncertainties and assumptions including, among others, statements regarding our capital needs,
business plans and expectations. In evaluating these statements, you should consider various factors, including the risks, uncertainties
and assumptions set forth in reports and other documents we have filed with or furnished to the SEC, including, without limitation,
this Form 10-Q Quarterly Report for the three and nine months ended April 30, 2016 and our Form 10-K Annual Report for the fiscal
year ended July 31, 2015 including the consolidated financial statements and related notes contained therein. These factors, or
any one of them, may cause our actual results or actions in the future to differ materially from any forward-looking statement
made in this document. Refer to “Cautionary Note RegardingForward-Looking Statements” as disclosed in our
Form 10-K Annual Report for the fiscal year ended July 31, 2015 and Item 1A. Risk Factors under Part II - Other Information of
this Quarterly Report.

Introduction

This MD&A is focused on material changes
in our financial condition from July 31, 2015, our most recently completed year-end, to April 30, 2016 and our results of operations
for the three and nine months ended April 30, 2016 and 2015, and should be read in conjunction with Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations as contained in our Form 10-K Annual Report for the fiscal
year ended July 31, 2015.

Business

We operate in a single reportable segment
and since 2004, as more fully described in our Form 10-K Annual Report for the fiscal year ended July 31, 2015, we have been engaged
in uranium mining and related activities, including exploration, pre-extraction, extraction and processing on uranium projects
located in the United States and Paraguay.

We utilize in-situ recovery (“ISR”)
mining where possible which we believe, when compared to conventional open pit or underground mining, requires lower capital and
operating expenditures with a shorter lead time to extraction and a reduced impact on the environment. We have one uranium mine
located in the State of Texas, the Palangana Mine, which utilizes ISR mining and commenced extraction of uranium concentrates
(“U3O8”), or yellowcake, in November 2010. We have one uranium processing facility located in
the State of Texas, the Hobson Processing Facility, which processes material from the Palangana Mine into drums of U3O8,
our only sales product and source of revenue, for shipping to a third-party storage and sales facility. At April 30, 2016, we
had no uranium supply or “off-take” agreements in place.

Our fully-licensed and 100%-owned Hobson
Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium
Belt where we utilize ISR mining. We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility acts
as the central processing site (the “hub”) for our Palangana Mine and future satellite uranium mining activities,
such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”). The Hobson
Processing Facility has a physical capacity to process uranium-loaded resins up to a total of two million pounds of U3O8
annually and is licensed to process up to one million pounds of U3O8 annually.

We also hold certain mineral rights in
various stages in the States of Arizona, Colorado, New Mexico, Texas and Wyoming and in the Republic of Paraguay, many of which
are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities
by other mining companies. We do not expect, however, to utilize ISR mining for all of our mineral rights in which case we would
expect to rely on conventional open pit and/or underground mining techniques.

Our operating and strategic framework
is based on expanding our uranium extraction activities, which includes advancing certain uranium projects with established mineralized
materials towards uranium extraction and establishing additional mineralized materials on our existing uranium projects or through
the acquisition of additional uranium projects.

During the three and nine months ended
April 30, 2016, uranium extraction at PAA-1, 2 and 3 of the Palangana Mine continued to operate at a reduced pace since implementing
our strategic plan in September 2013, to align our operations to a weak uranium market in a challenging post-Fukushima environment.
This strategy has included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness
in anticipation of a recovery in uranium prices.

27

During the nine months ended April 30,
2016, the Company

·

entered
into the Second Amended and Restated Agreement with its lenders and extended the $20,000,000
senior secured credit facility by deferring required principal payments to February 1,
2019 and by extending the maturity date to January 1, 2020;

·

completed a registered offering of 12,364,704 units at a price of $0.85 per unit for gross proceeds
of $10,510,000;

·

completed
an asset acquisition through issuance of 1,333,560 restricted common shares and payment
of $50,000 in cash;

·

continued
to advance development of Production Area Authorization (“PAA”) 4 of the
Palangana Mine;

·

continued
to advance exploration and permitting activities at the Burke Hollow Project;

·

continued
permitting work at the Anderson Project;

·

appointed
former United States Energy Secretary Spencer Abraham as Executive Chairman of the Company’s
Board of Directors; and

·

appointed
Pat Obara as the Company’s Chief Financial Officer.

Mineral Rights and Properties

The following is a summary of significant
activities by project for the nine months ended April 30, 2016:

Texas: Palangana Mine

During the nine months ended April 30,
2016, we continued with our strategic plan for reduced operations implemented in Fiscal 2014 and continued reduced operations
at the Palangana Mine to capture residual pounds of U3O8 only.

Wellfield design for the first module
at PAA-4, which is fully-permitted for uranium extraction, continued to advance. At April 30, 2016, a total of 214 drill holes
have been completed relating to PAA-4 for mineral trend exploration, delineation and monitor wells.

Texas: Burke Hollow Project

During the nine months ended April 30,
2016, 49 exploration holes totaling 25,020 feet were drilled at the Burke Hollow Project to depths ranging from 420 feet to 640
feet, with an average depth of 511 feet. At April 30, 2016, a total of 575 exploration holes, including 30 regional baseline monitor
wells, totaling 271,520 feet have been drilled to depths ranging from160 feet to 1,100 feet, with an average depth of 472 feet.

With the recent issuance of two Class
I disposal well permits, permitting activities continued on the Mine Area, Aquifer Exemption and Radioactive Material License
applications, which remain under technical review. An ecological assessment for the eastern trend extension was scheduled for
the spring of 2016 anticipating wellfield expansion of the eastern trend.

Arizona: Anderson Project

During the nine months ended April 30,
2016, the Company completed work on the Bureau of Land Management (“BLM”) Notice of Intent permit, which was submitted
for review in December 2015, and approved by the BLM in March 2016.

Asset Acquisition

On March 4, 2016, the Company entered
into a share purchase and option agreement (the “SPOA”) with CIC Resources Inc. (the “Vendor”) pursuant
to which the Company acquired (the “Acquisition”) all of the issued and outstanding shares of JDL Resources Inc. (“JDL”),
a wholly-owned subsidiary of the Vendor, and was granted an option to acquire all of the issued and outstanding shares of CIC
Resources (Paraguay) Inc. (“CIC”; the “Option”), another wholly-owned subsidiary of the Vendor. JDL’s
principal assets include a piece of land located in the department of Alto Parana in the Republic of Paraguay. CIC is the
beneficial owner of Paraguay Resources Inc.whichis
the 100% owner of certain mineral property concessions (the “Property”), which are located in the departments of Alto
Parana and Canindeyú in the Republic of Paraguay.

28

Pursuant to the SPOA, the Company issued
1,333,560 restricted common shares in the capital of the Company and paid $50,000 in cash to complete the Acquisition. If the
Company has paid or caused to have paid on the Vendor’s behalf certain maintenance payments and assessment work required
to keep the Property in good standing as directed by the Vendor, during the one-year period following completion of the Acquisition
(the “Option Period”), the Company may elect in its discretion to exercise the Option at any time, or if, in accordance
with the SPOA, the Vendor satisfied certain conditions precedent to exercise, the Company will be deemed to have exercised the
Option. Upon exercise of the Option the Company is required to pay, subject to certain adjustments, $250,000 in cash to
the Vendor and to grant to the Vendor a 1.5% net smelter returns royalty (the “Royalty”) on the Property as contemplated
by a proposed net smelter returns royalty agreement (the “Royalty Agreement”) to be executed by the parties upon exercise
of the Option. Pursuant to the proposed Royalty Agreement, the Company has the right, exercisable at any time for a period
of six years following exercise of the Option, to acquire one-half percent (0.5%) of the Royalty at a purchase price of $500,000.

Refer to Note 6: Other Long-Term Asset
and Liability of the Notes to the Consolidated Financial Statements for the three and nine months ended April 30, 2016.

Results of Operations

For the three and nine months ended April
30, 2016, we recorded net losses of $3,679,055 ($0.03 per share) and $13,552,594 ($0.13 per share), respectively. Costs and expenses
during the three and nine months ended April 30, 2016 were $2,936,921 and $11,262,590, respectively.

For the three and nine months ended April
30, 2015, we recorded a net loss of $5,347,729 ($0.06 per share) and $17,949,496 ($0.20 per share), respectively. Costs and expenses
during the three and nine months ended April 30, 2015 were $4,587,820 and $15,712,982, respectively.

Uranium Extraction Activities

During the three and nine months ended
April 30, 2016, we continued with our strategic plan for reduced operations implemented in Fiscal 2014 and continued reduced operations
at the Palangana Mine to capture residual pounds of U3O8 only. As a result, no U3O8
extraction or processing costs were capitalized to inventories during the three and nine months ended April 30, 2016.

During the three and nine months ended
April 30, 2015, the Palangana Mine extracted 2,000 and 13,000 pounds of U3O8, respectively, while the Hobson
Processing Facility processed 3,000 and 14,000 pounds of U3O8, respectively.

At April 30, 2016, the total value of
inventories was $251,999, which remained unchanged from July 31, 2015.

Costs and Expenses

For the three and nine months ended April
30, 2016, costs and expenses totaled $2,936,921 and $11,262,590, comprised of mineral property expenditures of $725,968 and $3,408,813,
general and administrative expenditures of $2,005,465 and $7,086,669, depreciation, amortization and accretion of $205,488 and
$680,573, and impairment loss on mineral properties of $Nil and $86,535, respectively. During the three and nine months ended
April 30, 2016, no sales of U3O8 were generated, therefore no corresponding cost of sales were recorded.

For the three and nine months ended April
30, 2015, costs and expenses totaled $4,587,820 and $15,712,982, comprised of mineral property expenditures of $1,045,842 and
$4,560,241, general and administrative of $3,167,896 and $9,711,933 and depreciation, amortization and accretion of $374,082 and
$1,440,808, respectively. No impairment loss on mineral property was recorded. During the three and nine months ended April 30,
2015, no sales of U3O8 were generated, therefore no corresponding cost of sales were recorded.

29

Mineral Property Expenditures

During the three and nine months ended
April 30, 2016, mineral property expenditures totaled $725,968 and $3,408,813, respectively, comprised of expenditures relating
to permitting, property maintenance, exploration and pre-extraction activities and all other non-extraction related activities
on our uranium projects. During the three and nine months ended April 30, 2016, a credit amount due to re-valuation of ARO totaling
$184,381 was recognized as a result of a descending ARO adjustment to fully depleted underlying mineral rights and properties,
which was recorded against the mineral property expenditures.

During the three and nine months ended
April 30, 2016, mineral property expenditures included expenditures directly related to maintaining operational readiness and
permitting compliance of $349,367 and $1,270,165, respectively, for the Palangana Mine and Hobson Processing Facility.

During the three and nine months ended
April 30, 2015, mineral property expenditures totaled $1,045,842 and $4,560,241 respectively, comprised of expenditures relating
to permitting, property maintenance, exploration, pre-extraction and all other non-extraction related activities on our uranium
projects. Additionally, these amounts include uranium extraction expenditures directly related to maintaining operational readiness
and permitting compliance of $497,846 and $1,456,206, respectively, for the Palangana Mine and Hobson Processing Facility.

The following table provides mineral property
expenditures on our projects for the periods indicated:

Three Months Ended April 30,

Nine Months Ended April 30,

2016

2015

2016

2015

Mineral Property Expenditures

Palangana Mine

$

280,345

$

500,535

$

1,031,625

$

1,621,391

Goliad Project

26,848

25,631

71,679

79,924

Burke Hollow Project

48,409

94,702

974,661

1,235,250

Longhorn Project

247

22,276

4,620

52,999

Salvo Project

4,622

16,751

21,697

39,590

Anderson Project

3,564

50,142

170,780

173,564

Workman Creek Project

418

-

32,109

31,300

Slick Rock Project

-

2,924

53,861

52,708

Yuty Project

89,246

41,274

291,788

301,035

Coronel Oviedo Project

136,031

132,315

422,763

428,077

Other Mineral Property Expenditures

136,238

159,292

517,611

544,403

Re-valuation of Asset Retirement Obligations

-

-

(184,381

)

-

$

725,968

$

1,045,842

$

3,408,813

$

4,560,241

General and Administrative

During the three and nine months ended
April 30, 2016, general and administrative expenses totaled $2,005,465 and $7,086,669 (three and nine months ended April 30, 2015:
$3,167,896 and $9,711,933), respectively.

The following summary provides a discussion
of the major expense categories, including analyses of the factors that caused significant variances compared to the same period
last year:

·

for
the three and nine months ended April 30, 2016, salaries, management and consulting fees
totaled $422,951 and $1,724,341, respectively, which decreased by $250,719 and $299,608,
respectively, compared with $673,670 and $1,953,949 for the three and nine months ended
April 30, 2015. This decrease was the result of pay reductions and other strategies implemented
by the Company during the three months ended April, 2016;

·

for
the three and nine months ended April 30, 2016, office, investor relations, communications
and travel expenses totaled $614,401 and $1,915,412, respectively, which decreased by
$185,981 and $307,520, respectively, compared with $800,382 and $2,222,932 for the three
and nine months ended April 30, 2015. This decrease reflects our continuing efforts to
monitor and control these costs and reduce expenses wherever possible;

·

for
the three months ended April 30, 2016, professional fees totaled $169,253, which decreased
by $206,712 compare with $375,965 for the three months ended April 30, 2015. For the
nine months ended April 30, 2016, professional fees totaled $959,265, which have remained
consistent compared with $906,508 for the nine months ended April 30, 2015. Professional
fees are comprised primarily of legal services related to regulatory compliance and ongoing
legal claims, in addition to audit and taxation services; and

30

·

for
the three and nine months ended April 30, 2016, stock-based compensation totaled $798,860
and $2,487,651, respectively, which decreased by $519,019 and $2,140,893, respectively,
compared with $1,317,879 and $4,628,544 for the three and nine months ended April 30,
2015. Stock-based compensation includes the fair value of stock options granted to optionees
and the fair value of shares of the Company’s common stock issued to consultants
and employees. During the three and nine months ended April 30, 2016 and 2015, we continued
to utilize equity-based payments for certain consulting services as part of our continuing
efforts to reduce cash outlays. In September 2014, stock options to purchase 7,540,000
shares of the Company’s common stock were granted to certain directors, officers,
employees and consultants of the Company. The fair value of these stock options has been
amortized on an accelerated basis over the vesting period of the options, resulting in
a higher stock-based compensation expense being recognized at the beginning of the vesting
periods than at the end of the vesting periods.

Depreciation, Amortization and Accretion

During the three and nine months ended
April 30, 2016, depreciation, amortization and accretion totaled $205,488 and $680,573, respectively, which decreased by $168,594
and $760,235, respectively, compared with $374,082 and $1,440,808 for the three and nine months ended April 30, 2015. This decrease
was primarily the result of the discontinuation of depletion and/or depreciation of the Palangana Mine and Hobson Processing Facility
due to further reduced operations, combined with the effects of certain property and equipment reaching full depletion and/or
depreciation. Depreciation, amortization and accretion include depreciation and amortization of long-term assets acquired in the
normal course of operations and accretion of asset retirement obligations.

Other Income and Expenses

Interest and Finance Costs

During the three and nine months ended
April 30, 2016, interest and finance costs totaled $710,767 and $2,278,230, respectively, which have remained consistent compared
to $764,761 and $2,270,104 for the three and nine months ended April 30, 2015.

For the three and nine months ended April
30, 2016, interest and finance costs were primarily comprised of, amortization of debt discount of $277,417 and $960,807, interest
paid on long-term debt of $400,000 and $1,217,778 and amortization of annual surety bond premium of $28,687 and $85,447, respectively.

For the three and nine months ended April
30, 2015, interest and finance costs were primarily comprised of: amortization of debt discount of $336,262 and $994,669, interest
paid on long-term debt of $395,555 and $1,213,333 and amortization of annual surety bond premium of $28,304 and $47,084, respectively.

Summary of Quarterly Results

For the Quarters Ended

April 30, 2016

January 31, 2016

October 31, 2015

July 31, 2015

Sales

$

-

$

-

$

-

$

3,080,000

Net loss

(3,679,055

)

(4,801,505

)

(5,072,034

)

(5,412,432

)

Total comprehensive loss

(3,678,919

)

(4,801,724

)

(5,072,233

)

(5,412,059

)

Basic and diluted loss per share

(0.03

)

(0.05

)

(0.05

)

(0.06

)

Total assets

59,558,492

49,982,462

53,130,380

57,900,257

For the Quarters Ended

April 30, 2015

January 31, 2015

October 31, 2014

July 31, 2014

Sales

$

-

$

-

$

-

$

-

Net loss

(5,347,729

)

(5,875,540

)

(6,726,227

)

(6,219,172

)

Total comprehensive loss

(5,347,522

)

(5,876,988

)

(6,726,451

)

(6,219,156

)

Basic and diluted loss per share

(0.06

)

(0.06

)

(0.07

)

(0.07

)

Total assets

52,171,028

55,315,547

59,608,374

64,655,888

31

Liquidity and Capital Resources

April 30, 2016

July 31, 2015

Cash and cash equivalents

$

10,086,805

$

10,092,408

Current assets

11,115,132

10,807,618

Current liabilities

2,113,915

4,560,698

Working capital

9,001,217

6,246,920

At April 30, 2016, we
had a working capital of $9,001,217, an increase of $2,754,297 from our working capital of $6,246,920 at July 31, 2015. Current
assets include $10,086,805 in cash and cash equivalents, the largest component of current assets. As a result, our working capital
balance will fluctuate significantly as we utilize our cash and cash equivalents to fund our operations including exploration
and pre-extraction activities.

As the Company does not expect to achieve
and maintain profitability in the near term, the continuation of the Company as a going concern is dependent upon our ability
to obtain adequate additional financing which we have successfully secured since inception, including those from asset divestitures.
However, there is no assurance that we will be successful in securing any form of additional financing in the future when required
and on terms favorable to the Company, therefore substantial doubt exists as to whether our cash resources and/or working capital
will be sufficient to enable the Company to continue its operations for the next twelve months. The continued operations of the
Company, including the recoverability of the carrying values of its assets, are dependent ultimately on the Company’s ability
to achieve and maintain profitability and positive cash flow from its operations. Refer to Note 1: Nature of Operations and Going
Concern of the Notes to the Consolidated Financial Statements for the three and nine months ended April 30, 2016.

During the three and nine months ended
April 30, 2016, uranium extraction at PAA-1, 2 and 3 of the Palangana Mine continued to operate at a reduced pace since implementing
our strategic plan in September 2013 to align our operations to a weak uranium market in a challenging post-Fukushima environment.
This strategy has included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness
in anticipation of a recovery in uranium prices.

Although our planned principal operations
commenced in Fiscal 2012 from which significant revenues from U3O8 sales have been realized historically,
our revenues generated from U3O8 sales have been inconsistent and we have yet to achieve profitability.
We have a history of operating losses resulting in an accumulated deficit balance since inception. During the nine months ended
April 30, 2016, no revenue from U3O8 sales was realized and our net loss totaled $13,552,594, resulting
in an accumulated deficit balance of $205,576,668 at April 30, 2016. During the nine months ended April 30, 2016 and 2015, net
cash flows decreased by $5,603 and $7,416,445, respectively. Furthermore, we do not expect to achieve and maintain profitability
or develop positive cash flow from our operations in the near term.

Historically, we have been reliant primarily
on equity financings from the sale of our common stock and, during Fiscal 2014 and 2013, on debt financing in order to fund our
operations. We have also relied to a limited extent, on cash flows generated from our mining activities during Fiscal 2015, 2013
and 2012, however, we have yet to achieve profitability or develop positive cash flow from operations, and we do not expect to
achieve profitability or develop positive cash flow from operations in the near term. Our reliance on equity and debt financings
is expected to continue for the foreseeable future, and their availability whenever such additional financing is required will
be dependent on many factors beyond our control including, but not limited to, the market price of uranium, the continuing public
support of nuclear power as a viable source of electrical generation, the volatility in the global financial markets affecting
our stock price and the status of the worldwide economy, any one of which may cause significant challenges in our ability to access
additional financing, including access to the equity and credit markets. We may also be required to seek other forms of financing,
such as asset divestitures or joint venture arrangements to continue advancing our uranium projects which would depend entirely
on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage
interest in the mineral project. However, there is no assurance that we will be successful in securing any form of additional
financing when required and on terms favorable to us.

Our operations are capital intensive and
future capital expenditures are expected to be substantial. We will require significant additional financing to fund our operations,
including continuing with our exploration and pre-extraction activities and acquiring additional uranium projects. In the absence
of such additional financing, we would not be able to fund our operations, including continuing with our exploration and pre-extraction
activities, which may result in delays, curtailment or abandonment of any one or all of our uranium projects.

32

Our anticipated operations including exploration
and pre-extraction activities, will be dependent on and may change as a result of our financial position, the market price of
uranium and other considerations, and such change may include accelerating the pace or broadening the scope of reducing our operations
as originally announced on September 5, 2013. Our ability to secure adequate funding for these activities will be impacted by
our operating performance, other uses of cash, the market price of uranium, the market price of our common stock and other factors
which may be beyond our control. Specific examples of such factors include, but are not limited to:

·

if
the weakness in the market price of uranium experienced in Fiscal 2015 continues or weakens
further during Fiscal 2016;

·

if
the weakness in the market price of our common stock experienced in Fiscal 2015 continues
or weakens further during Fiscal 2016;

·

if
we default on making scheduled payments of fees and complying with the restrictive covenants
as required under the Second Amended Credit Facility during Fiscal 2016, and it results
in accelerated repayment of our indebtedness and/or enforcement by the Lenders against
our key assets securing our indebtedness; and

·

if
another nuclear incident, such as the events that occurred at Fukushima in March 2011,
were to occur during Fiscal 2016, continuing public support of nuclear power as a viable
source of electrical generation may be adversely affected, which may result in significant
and adverse effects on both the nuclear and uranium industries.

Our long-term success, including the recoverability
of the carrying values of our assets and our ability to acquire additional uranium projects and to continue with exploration and
pre-extraction activities and mining activities on our existing uranium projects, will depend ultimately on our ability to achieve
and maintain profitability and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable
uranium and to develop these into profitable mining activities. The economic viability of our mining activities, including the
expected duration and profitability of the Palangana Mine and of any future satellite ISR mines, such as the Burke Hollow and
Goliad Projects, located within the South Texas Uranium Belt, has many risks and uncertainties. These include, but are not limited
to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium
concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing plant; (iv) significantly
higher than expected extraction costs; (v) significantly lower than expected uranium extraction; (vi) significant delays, reductions
or stoppages of uranium extraction activities; and (vii) the introduction of significantly more stringent regulatory laws and
regulations. Our mining activities may change as a result of any one or more of these risks and uncertainties and there is no
assurance that any ore body that we extract mineralized materials from will result in profitable mining activities.

Debt Financing

On February 9, 2016, the Company and its
Lenders entered into the Second Amended and Restated Credit Agreement, which supersedes in their entirety, the prior Amended and
Restated Credit Agreement dated and effective March 13, 2014 and the prior Credit Agreement dated and effective July 30, 2013.
Pursuant to the Second Amended and Restated Credit Agreement, the Company and the Lenders agreed to extend the $20,000,000 senior
secured credit facility by deferring required principal payments to February 1, 2019 and by extending the maturity date of the
Second Amended Credit Facility to January 1, 2020. Under the terms of the Second Amended and Restated Credit Agreement, the Credit
Facility Amount remains non-revolving with interest calculated at a rate of 8% per annum, compounded and payable on a monthly
basis, with the underlying effective interest rate being 14.28%.

Refer to Note 8: Long-Term Debt of the
Notes to the Consolidated Financial Statements for the three and nine months ended April 30, 2016.

33

Equity Financings

We filed a 2014 Shelf effective January
10, 2014 providing for the public offer and sale of certain securities of the Company from time to time, at its discretion, up
to an aggregate offering of $100 million.

On March 10, 2016, the Company completed
a registered offering of 12,364,704 units at a price of $0.85 per unit for gross proceeds of $10,510,000 pursuant to a prospectus
supplement to the 2014 Shelf. Each unit was comprised of one share of common stock of the Company and one-half of one share purchase
warrant, with each whole warrant being exercisable at a price of $1.20 to purchase one share to of common stock of the Company
for a three year period from the date of issuance.

At April 30, 2016, a total of $35.1 million
of the 2014 Shelf was utilized through the following registered offerings and sales of units, with a remaining available balance
of $64.9 million under the 2014 Shelf:

·

on
June 25, 2015: $10.0 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $6.7 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full; and

·

on
March 10, 2016: $10.5 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $7.9 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full.

Net cash provided by financing activities
during the nine months ended April 30, 2016 was $10,324,264, resulting from net cash of $10,099,149 from the share issuance for
equity financing and net cash of $225,115 received from the exercise of stock options. Net cash provided by financing activities
during the nine months ended April 30, 2015 was $454,984 resulting from net cash of $435,590 received from the share issuance
for an equity financing and the exercise of stock options, and an increase of $19,394 in amounts due to related parties.

Investing Activities

Net cash used in investing activities
during the nine months ended April 30, 2016 was $64,571, resulting primarily from net cash of $ 46,084 used in asset acquisition
and purchase of property, plant and equipment of $19,304. Net cash provided by investing activities during the nine months ended
April 30, 2015 was $3,890,475, resulting primarily from gross proceeds of $5,663,158 received from the release of reclamation
deposits, offset by the payment of collateral for the surety bonds of $1,690,208, acquisition of mineral rights and properties
of $73,624 and purchase of property, plant and equipment of $10,905.

Stock Options and Warrants

At April 30, 2016, the Company had stock
options outstanding representing 11,045,358 common shares at a weighted-average exercise price of $1.41 per share and share purchase
warrants outstanding representing 13,953,872 common shares at a weighted-average exercise price of $1.61 per share. At April 30,
2016, outstanding stock options and warrants represented a total 24,999,230 shares issuable for gross proceeds of approximately
$41,701,000 should these stock options and warrants be exercised in full. At April 30, 2016, outstanding in-the-money stock options
and warrants represented a total 1,219,634 common shares exercisable for gross proceeds of approximately $549,000 should these
in-the-money stock options and warrants be exercised in full. The exercise of these stock options and warrants is at the discretion
of the respective holders and, accordingly, there is no assurance that any of these stock options or warrants will be exercised
in the future.

34

Transactions with a Related Party

During the three and nine months ended
April 30, 2016, the Company incurred $30,134 and $128,727 (three and nine months ended April 30, 2015: $45,443 and $118,101),
respectively, in general and administrative costs paid to a company controlled by a direct family member of a director and officer
of the Company.

During the three months ended April 30,
2016, the Company issued 117,998 restricted common shares with fair value of $109,738 as settlement of amounts owed to this company
totaling $98,371. As a result, a loss on settlement of current liabilities of $11,367 was recognized and included in the consolidated
statements of operations. During the nine months ended April 30, 2015, the Company issued 15,000 restricted shares of common stock
with a fair value of $18,150 to this company for consulting services included in general and administrative costs.

At April 30, 2016, amounts owed to related
parties totaled $897 (July 31, 2015: $14,660). These amounts are unsecured, non-interest bearing and due on demand.

Material Commitments

Long-Term Debt Obligations

At April 30, 2016, we have made all scheduled
payments and complied with all of the covenants under the Second Amended and Restated Credit Agreement dated and effective February
9, 2016, and we expect to continue complying with all scheduled payments and covenants during our fiscal year ending July 31,
2016.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

For a complete summary of all of our significant
accounting policies, refer to Note 2: Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements
as presented under Item 8. Financial Statements and Supplementary Data in our Form 10-K Annual Report for the fiscal year ended
July 31, 2015.

Refer to “Critical Accounting Policies”
under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K Annual
Report for the fiscal year ended July 31, 2015.

35

Item 3. Quantitative
and Qualitative Disclosures About Market Risk

Refer to Item 7A. Quantitative and Qualitative
Disclosures About Market Risk in our Form 10-K Annual Report for the fiscal year ended July 31, 2015.

Item 4. Controls
and Procedures

Evaluation of Disclosure Controls and
Procedures

Our management, with the participation
of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period
covered by this Quarterly Report. Based on such evaluation, our Principal Executive Officer and Principal Financial Officer have
concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

It should be noted that any system of
controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness,
and there can be no assurance that any design will succeed in achieving its stated goals.

Changes in Internal Controls

There have been no changes in our internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our
fiscal quarter ended April 30, 2016, that have materially affected, or are reasonably likely to materially affect our internal
control over financial reporting.

36

PART
II – OTHER INFORMATION

Item 1. Legal
Proceedings

As of the date of this Quarterly Report,
other than as disclosed below, there are no material pending legal proceedings, other than ordinary routine litigation incidental
to our business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject, and
no director, officer, affiliate or record or beneficial owner of more than 5% of our common stock, or any associate or any such
director, officer, affiliate or security holder, is (i) a party adverse to us or any of our subsidiaries in any legal proceeding
or (ii) has an adverse interest to us or any of our subsidiaries in any legal proceeding. Other than as disclosed below, management
is not aware of any other material legal proceedings pending or that have been threatened against us or our properties.

On or about March 9, 2011, the Texas Commission
on Environmental Quality (the “TCEQ”) granted the Company’s applications for a Class III Injection Well Permit,
Production Area Authorization and Aquifer Exemption for its Goliad Project. On or about December 4, 2012, the U.S. Environmental
Protection Agency (the “EPA”) concurred with the TCEQ issuance of the Aquifer Exemption permit (the “AE”).
With the receipt of this concurrence, the final authorization required for uranium extraction, the Goliad Project achieved fully-permitted
status. On or about May 24, 2011, a group of petitioners, inclusive of Goliad County, appealed the TCEQ action to the 250th District
Court in Travis County, Texas. A motion filed by the Company to intervene in this matter was granted. The petitioners’
appeal lay dormant until on or about June 14, 2013, when the petitioners filed their initial brief in support of their position.
On or about January 18, 2013, a different group of petitioners, exclusive of Goliad County, filed a petition
for review with the Court of Appeals for the Fifth Circuit in the United States (the “Fifth Circuit”) to appeal the
EPA’s decision. On or about March 5, 2013, a motion filed by the Company to intervene in this matter was granted. The
parties attempted to resolve both appeals, to facilitate discussions and avoid further legal costs. The parties jointly agreed,
through mediation initially conducted through the Fifth Circuit on or about August 8, 2013, to abate the proceedings in the State
District Court. On or about August 21, 2013, the State District Court agreed to abate the proceedings. The EPA subsequently
filed a motion to remand without vacatur with the Fifth Circuit wherein the EPA's stated purpose was to elicit additional public
input and further explain its rationale for the approval. In requesting the remand without vacatur, which would allow the
AE to remain in place during the review period, the EPA denied the existence of legal error and stated that it was unaware of
any additional information that would merit reversal of the AE. The Company and the TCEQ filed a request to the Fifth Circuit
for the motion to remand without vacatur, and if granted, to be limited to a 60-day review period. On December 9, 2013,
by way of a procedural order from a three-judge panel of the Fifth Circuit, the Court granted the remand without vacatur and initially
limited the review period to 60 days. In March of 2014, at the EPA’s request, the Fifth Circuit extended the EPA’s
time period for review and additionally, during that same period, the Company conducted a joint groundwater survey of the site,
the result of which reaffirmed the Company’s previously filed groundwater direction studies. On or about June 17, 2014,
the EPA reaffirmed its earlier decision to uphold the granting of the Company’s existing AE, with the exception of a northwestern
portion containing less than 10% of the uranium resource which was withdrawn, but not denied, from the AE area until additional
information is provided in the normal course of mine development. On or about September 9, 2014, the petitioners filed a status
report with the State District Court which included a request to remove the stay agreed to in August 2013 and to set a briefing
schedule (the “Status Report”). In that Status Report, the petitioners also stated that they had decided not to pursue
their appeal at the Fifth Circuit. The Company continues to believe that the pending appeal is without merit and is
continuing as planned towards uranium extraction at its fully-permitted Goliad Project.

On or about April 3, 2012, the Company
received notification of a lawsuit filed in the State of Arizona, in the Superior Court for the County of Yavapai, by certain
petitioners (the “Plaintiffs”) against a group of defendants, including the Company and former management and board
members of Concentric Energy Corp. (“Concentric”). The lawsuit asserts certain claims relating to the Plaintiffs’
equity investments in Concentric, including allegations that the former management and board members of Concentric engaged in
various wrongful acts prior to and/or in conjunction with the merger of Concentric. The lawsuit originally further alleged that
the Company was contractually liable for liquidated damages arising from a pre-merger transaction which the Company previously
acknowledged and recorded as an accrued liability, and which portion of the lawsuit was settled in full by a cash payment of $149,194
to the Plaintiffs and subsequently dismissed. The court dismissed several other claims set forth in the Plaintiffs’ initial
complaint, but granted the Plaintiffs leave to file an amended complaint. The court denied a subsequent motion to dismiss
the amended complaint, finding that the pleading met the minimal pleading requirements under the applicable procedural rules.
In October 2013, the Company filed a formal response denying liability for any of the Plaintiffs’ remaining claims.
The court set the case for a four-week jury trial that was to take place in Yavapai County, Arizona, in April 2016. In November
2015, after the completion of discovery, the Company and the remaining defendants filed motions for summary judgment, seeking
to dismiss all of the Plaintiffs’ remaining claims. While those motions were pending, the parties reached a settlement
agreement with respect to all claims asserted by the Plaintiffs in that lawsuit. A formal settlement and release agreement
was subsequently executed, pursuant to which all of the Plaintiffs’ claims in the Arizona lawsuit were dismissed with prejudice.
Pursuant to the terms of the settlement agreement, the Defendants collectively paid $500,000 to the Plaintiffs, of which $50,000
will be paid by the Company.

37

On June 1, 2015, the Company received
notice that Westminster Securities Corporation filed a suit in the United States District Court for the Southern District of New
York, alleging a breach of contract relating to certain four-year warrants issued by Concentric in December 2008. Although
the Concentric warrants expired by their terms on December 31, 2012, Westminster bases its claim upon transactions allegedly occurring
prior to UEC’s merger with Concentric. The Company believes that this claim lacks merit and intends to vigorously
defend the same.

On or about June 29, 2015, Heather M.
Stephens filed a class action complaint against the Company and two of its executive officers in the United States District Court,
Southern District of Texas, with an amended class action complaint filed on November 16, 2015, (the "Securities Case")
seeking unspecified damages and alleging the defendants violated Section 17(b) of the Securities Act of 1933 and Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934. The Company has filed a motion to dismiss.

On or about September 10, 2015, John Price
filed a stockholder derivative complaint on behalf of the Company against the Company's Board of Directors, executive management
and three of its vice presidents in the United States District Court, Southern District of Texas, with an amended stockholder
derivative complaint filed on December 4, 2015, (the “Federal Derivative Case”) seeking unspecified damages on behalf
of the Company against the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations
in the Securities Case. The Company has filed a motion to dismiss.

On or about October 2, 2015, Marnie W.
McMahon filed a stockholder derivative complaint on behalf of the Company against the Company's Board of Directors, executive
management and three of its vice presidents in the District Court of Nevada (the “Nevada Derivative Case”) (collectively
with the Federal Derivative Case, the “Derivative Cases”) seeking unspecified damages on behalf of the Company against
the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations in the Securities
Case. On January 21, 2016, the court granted the Company’s motion to stay the Nevada Derivative Case pending the outcome
of the Federal Derivative Case.

The Company believes that the Securities
Case and the Derivative Cases are without merit and intends to defend vigorously against them.

The Company’s Board of Directors
received a shareholder demand letter dated September 10, 2015 relating to the allegations in the Securities Case (the “Shareholder
Demand”). The letter demands that the Board of Directors initiate an action against the Company’s Board of Directors
and two of its executive officers to recover damages allegedly caused to the Company. The Board of Directors is reviewing the
Shareholder Demand to determine the appropriate course of action.

Item 1A. Risk
Factors

In addition
to the information contained in our Form 10-K Annual Report for the fiscal year ended July 31, 2015, and this Form 10-Q Quarterly
Report, we have identified the following material risks and uncertainties which reflect our outlook and conditions known to us
as of the date of this Quarterly Report. These material risks and uncertainties should be carefully reviewed by our stockholders
and any potential investors in evaluating the Company, our business and the market value of our common stock. Furthermore, any
one of these material risks and uncertainties has the potential to cause actual results, performance, achievements or events to
be materially different from any future results, performance, achievements or events implied, suggested or expressed by any forward-looking
statements made by usor by persons acting on our behalf. Refer to “Cautionary Note Regarding Forward-Looking
Statements” as disclosed in our Form 10-K Annual Report for the fiscal year ended July 31, 2015.

38

There is
no assurance that we will be successful in preventing the material adverse effects that any one or more of the following material
risks and uncertainties may cause on our business, prospects, financial condition and operating results, which may result in a
significant decrease in the market price of our common stock. Furthermore, there is no assurance that these material risks and
uncertainties represent a complete list of the material risks and uncertainties facing us. There may be additional risks and uncertainties
of a material nature that, as of the date of this Quarterly Report, we are unaware of or that we consider immaterial that may
become material in the future, any one or more of which may result in a material adverse effect on us. You could lose all or a
significant portion of your investment due to any one of these material risks and uncertainties.

Risks Related to Our Company and Business

Evaluating our future performance
may be difficult since we have a limited financial and operating history, with significant negative cash flow and accumulated
deficit to date. Furthermore, there is no assurance that we will be successful in securing any form of additional financing in
the future, therefore substantial doubt exists as to whether our cash resources and/or working capital will be sufficient to enable
the Company to continue its operations over the next twelve months. Our long-term success will depend ultimately on our ability
to achieve and maintain profitability and to develop positive cash flow from our mining activities.

As more fully described under Item 1.
Business, in our Form 10-K Annual Report for the fiscal year ended July 31, 2015, Uranium Energy Corp. was incorporated under
the laws of the State of Nevada on May 16, 2003 and since 2004, we have been engaged in uranium mining and related activities,
including exploration, pre-extraction, extraction and processing, on projects located in the United States and Paraguay. In November
2010, we commenced uranium extraction for the first time at the Palangana Mine utilizing ISR and processed those materials at
the Hobson Processing Facility into drums of U3O8, our only sales product and source of revenue. We also
hold uranium projects in various stages of exploration and pre-extraction in the States of Arizona, Colorado, New Mexico, Texas
and Wyoming and the Republic of Paraguay.

As more fully described under “Liquidity
and Capital Resources” of Item 2. Management’s Discussion and Analysis of Financial Condition and Result of Operations,
we have a history of significant negative cash flow and net losses, with an accumulated deficit balance of $205.6 million at April
30, 2016. Historically, we have been reliant primarily on equity financings from the sale of our common stock and, for Fiscal
2014 and 2013, on debt financing in order to fund our operations. Although we generated revenues from sales of U3O8
during Fiscal 2015, 2013 and 2012 of $3.1 million, $9.0 million and $13.8 million, respectively, with no revenues from sales
of U3O8 generated during the nine months ended April 30, 2016, Fiscal 2014 or for any periods prior to Fiscal
2012, we have yet to achieve profitability or develop positive cash flow from our operations, and we do not expect to achieve
profitability or develop positive cash flow from operations in the near term. As a result of our limited financial and operating
history, including our significant negative cash flow and net losses to date, it may be difficult to evaluate our future performance.

At April 30, 2016, we had a working capital
of $9.0 million including cash and cash equivalents of $10.1 million. As the Company does not expect to achieve and maintain profitability
in the near term, the continuation of the Company as a going concern is dependent upon our ability to obtain adequate additional
financing which we have successfully secured since inception, including those from asset divestitures. However, there is no assurance
that we will be successful in securing any form of additional financing in the future, therefore, substantial doubt exists as
to whether our cash resources and/or working capital will be sufficient to enable the Company to continue its operations over
the next twelve months.

Our reliance on equity and debt financings
is expected to continue for the foreseeable future, and their availability whenever such additional financing is required, will
be dependent on many factors beyond our control including, but not limited to, the market price of uranium, the continuing public
support of nuclear power as a viable source of electrical generation, the volatility in the global financial markets affecting
our stock price and the status of the worldwide economy, any one of which may cause significant challenges in our ability to access
additional financing, including access to the equity and credit markets. We may also be required to seek other forms of financing,
such as asset divestitures or joint venture arrangements to continue advancing our uranium projects which would depend entirely
on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage
interest in the mineral project.

39

Our long-term success, including the recoverability
of the carrying values of our assets and our ability to acquire additional uranium projects and continue with exploration and
pre-extraction activities and mining activities on our existing uranium projects, will depend ultimately on our ability to achieve
and maintain profitability and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable
uranium and to develop these into profitable mining activities. The economic viability of our mining activities, including the
expected duration and profitability of the Palangana Mine and of any future satellite ISR mines, such as the Burke Hollow and
Goliad Projects, located within the South Texas Uranium Belt, has many risks and uncertainties. These include, but are not limited
to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium
concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing plant; (iv) significantly
higher than expected extraction costs; (v) significantly lower than expected uranium extraction; (vi) significant delays, reductions
or stoppages of uranium extraction activities; and (vi) the introduction of significantly more stringent regulatory laws and regulations.
Our mining activities may change as a result of any one or more of these risks and uncertainties and there is no assurance that
any ore body that we extract mineralized materials from will result in achieving and maintaining profitability and developing
positive cash flow.

Our operations are capital intensive,
and we will require significant additional financing to acquire additional uranium projects and continue with our exploration
and pre-extraction activities on our existing uranium projects.

Our operations are capital intensive and
future capital expenditures are expected to be substantial. We will require significant additional financing to fund our operations,
including acquiring additional uranium projects and continuing with our exploration and pre-extraction activities which include
assaying, drilling, geological and geochemical analysis and mine construction costs. In the absence of such additional financing
we would not be able to fund our operations or continue with our exploration and pre-extraction activities, which may result in
delays, curtailment or abandonment of any one or all of our uranium projects.

If we are unable to service our
indebtedness, we may be faced with accelerated repayments or lose the assets securing our indebtedness. Furthermore, restrictive
covenants governing our indebtedness may restrict our ability to pursue our business strategies.

Effective on February 9, 2016, we entered
into a Second Amended and Restated Credit Agreement with our Lenders under which we had previously drawn down the maximum $20
million in principal as of April 30, 2016. The Second Amended Credit Facility requires monthly interest payments calculated at
8% per annum and other periodic fees, and principal repayments of $1.67 million per month over a twelve-month period commencing
on February 1, 2019. Our ability to continue making these scheduled payments will be dependent on and may change as a result of
our financial condition and operating results. Failure to make any one of these scheduled payments will put us in default with
the Second Amended Credit Facility which, if not addressed or waived, could require accelerated repayment of our indebtedness
and/or enforcement by the Lenders against the Company’s assets. Enforcement against our assets would have a material adverse
effect on our financial condition and operating results.

Furthermore, the Second Amended Credit
Facility includes restrictive covenants that, among other things, limit our ability to sell our assets or to incur additional
indebtedness other than permitted indebtedness, which may restrict our ability to pursue certain business strategies from time
to time. If we do not comply with these restrictive covenants, we could be in default which, if not addressed or waived, could
require accelerated repayment of our indebtedness and/or enforcement by the Lenders against our assets.

Our uranium extraction and sales
history is limited, with our uranium extraction to date originating from a single uranium mine. Our ability to continue generating
revenue is subject to a number of factors, any one or more of which may adversely affect our financial condition and operating
results.

We have a limited history of uranium extraction
and generating revenue. In November 2010, we commenced uranium extraction at a single uranium mine, the Palangana Mine, which
has been our sole source for the U3O8 sold to generate our revenues from sales of U3O8
during Fiscal 2015, 2013 and 2012 of $3.1 million, $9.0 million and $13.8 million, respectively, with no revenues from sales of
U3O8 generated during Fiscal 2014 or for any periods prior to Fiscal 2012.

During the nine months ended April 30,
2016, uranium extraction at PAA-1, 2 and 3 continued to operate at a reduced pace since implementing our strategic plan in September
2013 to align our operations to a weak uranium commodity market in a challenging post-Fukushima environment. This strategy has
included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness in anticipation of
a recovery in uranium prices. Our ability to continue generating revenue from the Palangana Mine is subject to a number
of factors which include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty
in marketing and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct the mine
and/or processing plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected uranium
extraction; (vi) significant delays, reductions or stoppages of uranium extraction activities; and (vii) the introduction of significantly
more stringent regulatory laws and regulations. Furthermore, continued mining activities at the Palangana Mine will eventually
deplete the Palangana Mine or cause such activities to become uneconomical, and if we are unable to directly acquire or develop
existing uranium projects, such as the Burke Hollow and Goliad Projects, into additional uranium mines from which we can commence
uranium extraction, it will negatively impact our ability to generate revenues. Any one or more of these occurrences may adversely
affect our financial condition and operating results.

40

Uranium exploration and pre-extraction
programs and mining activities are inherently subject to numerous significant risks and uncertainties, and actual results may
differ significantly from expectations or anticipated amounts. Furthermore, exploration programs conducted on our uranium projects
may not result in the establishment of ore bodies that contain commercially recoverable uranium.

Uranium exploration and pre-extraction
programs and mining activities are inherently subject to numerous significant risks and uncertainties, many beyond our control,
including, but not limited to: (i) unanticipated ground and water conditions and adverse claims to water rights; (ii) unusual
or unexpected geological formations; (iii) metallurgical and other processing problems; (iv) the occurrence of unusual weather
or operating conditions and other force majeure events; (v) lower than expected ore grades; (vi) industrial accidents; (vii) delays
in the receipt of or failure to receive necessary government permits; (viii) delays in transportation; (ix) availability of contractors
and labor; (x) government permit restrictions and regulation restrictions; (xi) unavailability of materials and equipment; and
(xii) the failure of equipment or processes to operate in accordance with specifications or expectations. These risks and uncertainties
could result in: (i) delays, reductions or stoppages in our mining activities; (ii) increased capital and/or extraction costs;
(iii) damage to, or destruction of, our mineral projects, extraction facilities or other properties; (iv) personal injuries; (v)
environmental damage; (vi) monetary losses; and (vii) legal claims.

Success in uranium exploration is dependent
on many factors, including, without limitation, the experience and capabilities of a company’s management, the availability
of geological expertise and the availability of sufficient funds to conduct the exploration program. Even if an exploration program
is successful and commercially recoverable uranium is established, it may take a number of years from the initial phases of drilling
and identification of the mineralization until extraction is possible, during which time the economic feasibility of extraction
may change such that the uranium ceases to be economically recoverable. Uranium exploration is frequently non-productive due,
for example, to poor exploration results or the inability to establish ore bodies that contain commercially recoverable uranium,
in which case the uranium project may be abandoned and written-off. Furthermore, we will not be able to benefit from our exploration
efforts and recover the expenditures that we incur on our exploration programs if we do not establish ore bodies that contain
commercially recoverable uranium and develop these uranium projects into profitable mining activities, and there is no assurance
that we will be successful in doing so for any of our uranium projects.

Whether an ore body contains commercially
recoverable uranium depends on many factors including, without limitation: (i) the particular attributes, including material changes
to those attributes, of the ore body such as size, grade, recovery rates and proximity to infrastructure; (ii) the market price
of uranium, which may be volatile; and (iii) government regulations and regulatory requirements including, without limitation,
those relating to environmental protection, permitting and land use, taxes, land tenure and transportation.

We have not established proven or
probable reserves through the completion of a “final” or “bankable” feasibility study for any of our uranium
projects, including the Palangana Mine. Furthermore, we have no plans to establish proven or probable reserves for any of our
uranium projects for which we plan on utilizing ISR mining, such as the Palangana Mine. Since we commenced extraction of mineralized
materials from the Palangana Mine without having established proven or probable reserves, it may result in our mining activities
at the Palangana Mine, and at any future uranium projects for which proven or probable reserves are not established, being inherently
riskier than other mining activities for which proven or probable reserves have been established.

We have established the existence of mineralized
materials for certain uranium projects, including the Palangana Mine. We have not established proven or probable reserves, as
defined by the SEC under Industry Guide 7, through the completion of a “final” or “bankable” feasibility
study for any of our uranium projects, including the Palangana Mine. Furthermore, we have no plans to establish proven or probable
reserves for any of our uranium projects for which we plan on utilizing ISR mining, such as the Palangana Mine. Since we commenced
uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent
uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.
Any mineralized materials established or extracted from the Palangana Mine should not in any way be associated with having established
or produced from proven or probable reserves.

41

Since we are in the Exploration
Stage, pre-production expenditures including those related to pre-extraction activities are expensed as incurred, the effects
of which may result in our consolidated financial statements not being directly comparable to the financial statements of companies
in the Production Stage.

Despite the fact that we commenced uranium
extraction at the Palangana Mine in November 2010, we remain in the Exploration Stage as defined under Industry Guide 7, and will
continue to remain in the Exploration Stage until such time proven or probable reserves have been established, which may never
occur. We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles
(“U.S. GAAP”) under which acquisition costs of mineral rights are initially capitalized as incurred while pre-production
expenditures are expensed as incurred until such time we exit the Exploration Stage. Expenditures relating to exploration
activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such
time proven or probable reserves are established for that uranium project, after which subsequent expenditures relating to mine
development activities for that particular project are capitalized as incurred.

We have neither established nor have any
plans to establish proven or probable reserves for our uranium projects for which we plan on utilizing ISR mining, such as the
Palangana Mine. Companies in the Production Stage as defined by the SEC under Industry Guide 7, having established proven and
probable reserves and exited the Exploration Stage, typically capitalize expenditures relating to ongoing development activities,
with corresponding depletion calculated over proven and probable reserves using the units-of-production method and allocated to
future reporting periods to inventory and, as that inventory is sold, to cost of goods sold. As we are in the Exploration Stage,
it has resulted in us reporting larger losses than if we had been in the Production Stage due to the expensing, instead of capitalization,
of expenditures relating to ongoing mill and mine pre-extraction activities. Additionally, there would be no corresponding amortization
allocated to our future reporting periods since those costs would have been expensed previously, resulting in both lower inventory
costs and cost of goods sold and results of operations with higher gross profits and lower losses than if we had been in the Production
Stage. Any capitalized costs, such as acquisition costs of mineral rights, are depleted over the estimated extraction life using
the straight-line method. As a result, our consolidated financial statements may not be directly comparable to the financial statements
of companies in the Production Stage.

Estimated costs of future reclamation
obligations may be significantly exceeded by actual costs incurred in the future. Furthermore, only a portion of the financial
assurance required for the future reclamation obligations has been funded.

We are responsible for certain remediation
and decommissioning activities in the future primarily for the Hobson Processing Facility and the Palangana Mine, and have recorded
a liability of $3.9 million on our balance sheet at April 30, 2016, to recognize the present value of the estimated costs of such
reclamation obligations. Should the actual costs to fulfill these future reclamation obligations materially exceed
these estimated costs, it may have an adverse effect on our financial condition and operating results, including not having the
financial resources required to fulfill such obligations when required to do so.

During Fiscal 2015, we secured $5.6 million
of surety bonds as an alternate source of financial assurance for the estimated costs of the reclamation obligations of the Hobson
Processing Facility and the Palangana Mine, of which we have $1.7 million funded and held as restricted cash for collateral purposes
as required by the surety. We may be required at any time to fund the remaining $3.9 million or any portion thereof for a number
of reasons including, but not limited to, the following: (i) the terms of the surety bonds are amended, such as an increase in
collateral requirements; (ii) we are in default with the terms of the surety bonds; (iii) the surety bonds are no longer acceptable
as an alternate source of financial assurance by the regulatory authorities; or (iv) the surety encounters financial difficulties.
Should any one or more of these events occur in the future, we may not have the financial resources to fund the remaining amount
or any portion thereof when required to do so.

42

We do not insure against all of
the risks we face in our operations.

In general, where coverage is available
and not prohibitively expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions
and limitations. We currently maintain insurance against certain risks including securities and general commercial liability claims
and certain physical assets used in our operations, subject to exclusions and limitations, however, we do not maintain insurance
to cover all of the potential risks and hazards associated with our operations. We may be subject to liability for environmental,
pollution or other hazards associated with our exploration, pre-extraction and extraction activities, which we may not be insured
against, which may exceed the limits of our insurance coverage or which we may elect not to insure against because of high premiums
or other reasons. Furthermore, we cannot provide assurance that any insurance coverage we currently have will continue to be available
at reasonable premiums or that such insurance will adequately cover any resulting liability.

Acquisitions that we may make from
time to time could have an adverse impact on us.

From time to time, we examine opportunities
to acquire additional mining assets and businesses. Any acquisition that we may choose to complete may be of a significant size,
may change the scale of our business and operations, and may expose us to new geographic, political, operating, financial and
geological risks. Our success in our acquisition activities depends on our ability to identify suitable acquisition candidates,
negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of our Company.
Any acquisitions would be accompanied by risks which could have a material adverse effect on our business. For example: (i) there
may be a significant change in commodity prices after we have committed to complete the transaction and established the purchase
price or exchange ratio; (ii) a material ore body may prove to be below expectations; (iii) we may have difficulty integrating
and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial
and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls across the organization;
(iv) the integration of the acquired business or assets may disrupt our ongoing business and our relationships with employees,
customers, suppliers and contractors; and (v) the acquired business or assets may have unknown liabilities which may be significant.
In the event that we choose to raise debt capital to finance any such acquisition, our leverage will be increased. If we choose
to use equity as consideration for such acquisition, existing shareholders may suffer dilution. Alternatively, we may choose to
finance any such acquisition with our existing resources. There can be no assurance that we would be successful in overcoming
these risks or any other problems encountered in connection with such acquisitions.

The uranium industry is subject
to numerous stringent laws, regulations and standards, including environmental protection laws and regulations. If any changes
occur that would make these laws, regulations and standards more stringent, it may require capital outlays in excess of those
anticipated or cause substantial delays, which would have a material adverse effect on our operations.

The laws, regulations, policies or current
administrative practices of any government body, organization or regulatory agency in the United States or any other applicable
jurisdiction, may change or be applied or interpreted in a manner which may also have a material adverse effect on our operations.
The actions, policies or regulations, or changes thereto, of any government body or regulatory agency or special interest group,
may also have a material adverse effect on our operations.

Uranium exploration and pre-extraction
programs and mining activities are subject to stringent environmental protection laws and regulations at the federal, state, and
local levels. These laws and regulations include permitting and reclamation requirements, regulate emissions, water storage and
discharges and disposal of hazardous wastes. Uranium mining activities are also subject to laws and regulations which seek to
maintain health and safety standards by regulating the design and use of mining methods. Various permits from governmental and
regulatory bodies are required for mining to commence or continue, and no assurance can be provided that required permits will
be received in a timely manner.

Our compliance costs including the posting
of surety bonds associated with environmental protection laws and regulations and health and safety standards have been significant
to date, and are expected to increase in scale and scope as we expand our operations in the future. Furthermore, environmental
protection laws and regulations may become more stringent in the future, and compliance with such changes may require capital
outlays in excess of those anticipated or cause substantial delays, which would have a material adverse effect on our operations.

43

To the best of our knowledge, our operations
are in compliance, in all material respects, with all applicable laws, regulations and standards. If we become subject to liability
for any violations, we may not be able or may elect not to insure against such risk due to high insurance premiums or other reasons.
Where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against
such risk, subject to exclusions and limitations. However, we cannot provide any assurance that such insurance will continue to
be available at reasonable premiums or that such insurance will be adequate to cover any resulting liability.

We may not be able to obtain, maintain
or amendrights, authorizations, licenses, permits or consents required for our operations.

Our exploration and mining activities
are dependent upon the grant of appropriate rights, authorizations, licences, permits and consents, as well as continuation and
amendment of these rights, authorizations, licences, permits and consents already granted, which may be granted for a defined
period of time, or may not be granted or may be withdrawn or made subject to limitations. There can be no assurance that all necessary
rights, authorizations, licences, permits and consents will be granted to us, or that authorizations, licences, permits and consents
already granted will not be withdrawn or made subject to limitations.

Major nuclear
incidents may have adverse effects on the nuclear and uranium industries.

The nuclear incident
that occurred in Japan in March 2011 had significant and adverse
effects on both the nuclear and uranium industries. If another nuclear incident were to occur, it may have further adverse effects
for both industries. Public opinion of nuclear power as a source of electrical generation may be adversely affected, which may
cause governments of certain countries to further increase regulation
for the nuclear industry, reduce or abandon current reliance on nuclear power or reduce or abandon existing plans for nuclear
power expansion. Any one of these occurrences has the potential to reduce current and/or future demand for nuclear power, resulting
in lower demand for uranium and lower market prices for uranium, adversely affecting the Company’s operations and prospects.
Furthermore, the growth of the nuclear and uranium industries is dependent on continuing and growing public support of
nuclear power as a viable source of electrical generation.

The marketability of uranium concentrates
will be affected by numerous factors beyond our control which may result in our inability to receive an adequate return on our
invested capital.

The marketability of uranium concentrates
extracted by us will be affected by numerous factors beyond our control. These factors include macroeconomic factors, fluctuations
in the market price of uranium, governmental regulations, land tenure and use, regulations concerning the importing and exporting
of uranium and environmental protection regulations. The future effects of these factors cannot be accurately predicted, but any
one or a combination of these factors may result in our inability to receive an adequate return on our invested capital.

The uranium industry is highly competitive
and we may not be successful in acquiring additional projects.

The uranium industry is highly competitive,
and our competition includes larger, more established companies with longer operating histories that not only explore for and
produce uranium, but also market uranium and other products on a regional, national or worldwide basis. Due to their greater financial
and technical resources, we may not be able to acquire additional uranium projects in a competitive bidding process involving
such companies. Additionally, these larger companies have greater resources to continue with their operations during periods of
depressed market conditions.

We hold
mineral rights in foreign jurisdictions which could be subject to additional risks due to political, taxation, economic and cultural
factors.

We hold certain mineral rights located
in Paraguay through the acquisition of Piedra Rica Mining S.A. and Transandes Paraguay S.A., both companies incorporated in Paraguay.
Operations in foreign jurisdictions outside of the United States and Canada, especially in developing countries, may be subject
to additional risks as they may have different political, regulatory, taxation, economic and cultural environments that may adversely
affect the value or continued viability of our rights. These additional risks include, but are not limited to: (i) changes in
governments or senior government officials; (ii) changes to existing laws or policies on foreign investments, environmental protection,
mining and ownership of mineral interests; (iii) renegotiation, cancellation, expropriation and nationalization of existing permits
or contracts; (iv) foreign currency controls and fluctuations; and (v) civil disturbances, terrorism and war.

44

In the event of a dispute arising at our
foreign operations in Paraguay, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in
subjecting foreign persons to the jurisdiction of the courts in the United States or Canada. We may also be hindered or prevented
from enforcing our rights with respect to a government entity or instrumentality because of the doctrine of sovereign immunity.
Any adverse or arbitrary decision of a foreign court may have a material and adverse impact on our business, prospects, financial
condition and results of operations.

The title to our mineral property
interests may be challenged.

Although we have taken reasonable measures
to ensure proper title to our interests in mineral properties and other assets, there is no guarantee that the title to any of
such interests will not be challenged. No assurance can be given that we will be able to secure the grant or the renewal of existing
mineral rights and tenures on terms satisfactory to us, or that governments in the jurisdictions in which we operate will not
revoke or significantly alter such rights or tenures or that such rights or tenures will not be challenged or impugned by third
parties, including local governments, aboriginal peoples or other claimants. Our mineral properties may be subject to prior unregistered
agreements, transfers or claims, and title may be affected by, among other things, undetected defects. A successful challenge
to the precise area and location of our claims could result in us being unable to operate on our properties as permitted or being
unable to enforce our rights with respect to our properties.

Due to the nature of our business,
we may be subject to legal proceedings which may divert management’s time and attention from our business and result in
substantial damage awards.

Due to the nature of our business, we
may be subject to numerous regulatory investigations, securities claims, civil claims, lawsuits and other proceedings in the ordinary
course of our business including those described under Item 1. Legal Proceedings. The outcome of these lawsuits is uncertain
and subject to inherent uncertainties, and the actual costs to be incurred will depend upon many unknown factors. We may be forced
to expend significant resources in the defense of these suits, and we may not prevail. Defending against these and other lawsuits
in the future may not only require us to incur significant legal fees and expenses, but may become time-consuming for us and detract
from our ability to fully focus our internal resources on our business activities. The results of any legal proceeding cannot
be predicted with certainty due to the uncertainty inherent in litigation, the difficulty of predicting decisions of regulators,
judges and juries and the possibility that decisions may be reversed on appeal. There can be no assurances that these matters
will not have a material adverse effect on our business, financial position or operating results.

We depend on certain key personnel,
and our success will depend on our continued ability to retain and attract such qualified personnel.

Our success is dependent on the efforts,
abilities and continued service of certain senior officers and key employees and consultants. A number of our key employees and
consultants have significant experience in the uranium industry. A loss of service from any one of these individuals may adversely
affect our operations, and we may have difficulty or may not be able to locate and hire a suitable replacement.

Certain directors and officers may
be subject to conflicts of interest.

The majority of our directors and officers
are involved in other business ventures including similar capacities with other private or publicly-traded companies. Such individuals
may have significant responsibilities to these other business ventures, including consulting relationships, which may require
significant amounts of their available time. Conflicts of interest may include decisions on how much time to devote to our business
affairs and what business opportunities should be presented to us. Our Code of Business Conduct for Directors, Officers and Employees
provides for guidance on conflicts of interest.

45

The laws of the State of Nevada
and our Articles of Incorporation may protect our directors and officers from certain types of lawsuits.

The laws of the State of Nevada provide
that our directors and officers will not be liable to the Company or its stockholders for monetary damages for all but certain
types of conduct as directors and officers of the Company. Our Bylaws provide for broad indemnification powers to all persons
against all damages incurred in connection with our business to the fullest extent provided or allowed by law. These indemnification
provisions may require us to use our limited assets to defend our directors and officers against claims, and may have the effect
of preventing stockholders from recovering damages against our directors and officers caused by their negligence, poor judgment
or other circumstances.

Several of our directors and officers
are residents outside of the United States., and it may be difficult for stockholders to enforce within the United States any
judgments obtained against such directors or officers.

Several of our directors and officers
are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’
assets are located outside of the United States. As a result, it may be difficult for investors to effect service of process on
such directors and officers, or enforce within the United States any judgments obtained against such directors and officers, including
judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently,
stockholders may be effectively prevented from pursuing remedies against such directors and officers under United States federal
securities laws. In addition, stockholders may not be able to commence an action in a Canadian court predicated upon the civil
liability provisions under United States federal securities laws. The foregoing risks also apply to those experts identified in
this document that are not residents of the United States.

Disclosure controls and procedures
and internal control over financial reporting, no matter how well designed and operated, are designed to obtain reasonable, and
not absolute, assurance as to its reliability and effectiveness.

Management’s evaluation on the effectiveness
of disclosure controls and procedures is designed to ensure that information required for disclosure in our public filings is
recorded, processed, summarized and reported on a timely basis to our senior management, as appropriate, to allow timely decisions
regarding required disclosure. Management’s report on internal control over financial reporting is designed to provide reasonable
assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use and transactions
are properly recorded and reported. However, any system of controls, no matter how well designed and operated, is based in part
upon certain assumptions designed to obtain reasonable, and not absolute, assurance as to its reliability and effectiveness. Any
failure to maintain effective disclosure controls and procedures in the future may result in our inability to continue meeting
our reporting obligations in a timely manner, qualified audit opinions or restatements of our financial reports, any one of which
may affect the market price for our common stock and our ability to access the capital markets.

Risks Related to Our Common Stock

Historically, the market price of
our common stock has been and may continue to fluctuate significantly.

On September 28, 2007, our common stock
commenced trading on the NYSE MKT (formerly known as the American Stock Exchange and the NYSE Amex Equities Exchange) and prior
to that, traded on the OTC Bulletin Board.

The global markets have experienced significant
and increased volatility in the past, and have been impacted by the effects of mass sub-prime mortgage defaults and liquidity
problems of the asset-backed commercial paper market, resulting in a number of large financial institutions requiring government
bailouts or filing for bankruptcy. The effects of these past events and any similar events in the future may continue to or further
affect the global markets, which may directly affect the market price of our common stock and our accessibility for additional
financing. Although this volatility may be unrelated to specific company performance, it can have an adverse effect on the market
price of our shares which, historically, has fluctuated significantly and may continue to do so in the future.

In addition to the volatility associated
with general economic trends and market conditions, the market price of our common stock could decline significantly due to the
impact of any one or more events, including, but not limited to, the following: (i) volatility in the uranium market; (ii) occurrence
of a major nuclear incident such as the events in Fukushima in March 2011; (iii) changes in the outlook for the nuclear power
and uranium industries; (iv) failure to meet market expectations on our exploration, pre-extraction or extraction activities,
including abandonment of key uranium projects; (v) sales of a large number of our shares held by certain stockholders including
institutions and insiders; (vi) downward revisions to previous estimates on us by analysts; (vii) removal from market indices;
(viii) legal claims brought forth against us; and (ix) introduction of technological innovations by competitors or in competing
technologies.

46

A prolonged decline in the market
price of our common stock could affect our ability to obtain additional financing which would adversely affect our operations.

Historically, we have relied on equity
financing and more recently, on debt financing, as primary sources of financing. A prolonged decline in the market price of our
common stock or a reduction in our accessibility to the global markets may result in our inability to secure additional financing
which would have an adverse effect on our operations.

Additional issuances of our common
stock may result in significant dilution to our existing shareholders and reduce the market value of their investment.

We are authorized to issue 750,000,000
shares of common stock of which 116,092,655 shares were issued and outstanding as of April 30, 2016. Future issuances for financings,
mergers and acquisitions, exercise of stock options and share purchase warrants and for other reasons may result in significant
dilution to and be issued at prices substantially below the price paid for our shares held by our existing stockholders. Significant
dilution would reduce the proportionate ownership and voting power held by our existing stockholders, and may result in a decrease
in the market price of our shares.

We filed a 2014 Shelf, which was declared
effective on January 10, 2014. This Registration Statement provides for the public offer and sale of certain securities of the
Company from time to time, at our discretion, up to an aggregate offering amount of $100 million, of which a total of $35.1 million
has been utilized through public offerings as of April 30, 2016.

We are subject to the Continued
Listing Criteria of the NYSE MKT and our failure to satisfy these criteria may result in delisting of our common stock.

Our common stock is currently listed on
the NYSE MKT. In order to maintain this listing, we must maintain certain share prices, financial and share distribution
targets, including maintaining a minimum amount of shareholders’ equity and a minimum number of public shareholders.
In addition to these objective standards, the NYSE MKT may delist the securities of any issuer (i) if, in its opinion, the issuer’s
financial condition and/or operating results appear unsatisfactory; (ii) if it appears that the extent of public distribution
or the aggregate market value of the security has become so reduced as to make continued listing on the NYSE MKT inadvisable;
(iii) if the issuer sells or disposes of principal operating assets or ceases to be an operating company; (iv) if an issuer fails
to comply with the NYSE MKT’s listing requirements; (v) if an issuer’s common stock sells at what the NYSE MKT considers
a “low selling price” and the issuer fails to correct this via a reverse split of shares after notification by the
NYSE MKT; or (vi) if any other event occurs or any condition exists which makes continued listing on the NYSE MKT, in its opinion,
inadvisable.

If the NYSE MKT delists our common stock,
investors may face material adverse consequences, including, but not limited to, a lack of trading market for our securities,
reduced liquidity, decreased analyst coverage of our securities, and an inability for us to obtain additional financing to fund
our operations.

47

Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds

During our fiscal quarter ended April
30, 2016, we issued the following securities that were not registered under the Securities Act of 1933, as amended (the “Securities
Act”):

·

On
February 3, 2016, we issued an aggregate of 116,364 shares of restricted common stock
to three consultants in consideration for services under consulting agreements, as follows:
(i) we issued 13,637 and 22,727 shares of restricted common stock to two consultants
at a deemed issuance price of $1.10 per share; and (ii) we issued 80,000 shares of restricted
common stock to a consultant at a deemed issuance price of $0.91 per share. We relied
on exemptions from registration under the Securities Act provided by Rule 506 of Regulation
D and/or Section 4(a)(2) with respect to the issuance of these shares to one consultant
and on exemptions from registration under the Securities Act provided by Regulation S
and/or Section 4(a)(2) with respect to the issuance of these shares to the other two
consultants.

·

On
February 17, 2016, we issued 487,574 shares of restricted common stock to two consultants
pursuant to shares for debt subscription agreements at a deemed issuance price of $0.83367
per share. We relied on exemptions from registration under the Securities Act provided
by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares.

·

On
February 17, 2016, we issued 20,833 shares of restricted common stock to a consultant
in consideration for services under a consulting agreement at a deemed issuance price
of $1.20 per share. We relied on exemptions from registration under the Securities Act
provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these
shares.

·

On
March 3, 2016, we issued an aggregate of 36,363 shares of restricted common stock to
two consultants in consideration for services under consulting agreements at a deemed
issuance price of $1.10 per share. We relied on exemptions from registration under the
Securities Act provided by Rule 506 of Regulation D and/or Section 4(a)(2) with respect
to the issuance of these shares to one consultant and on exemptions from registration
under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect
to the issuance of these shares to the other consultant.

·

On
March 4, 2016, we issued 1,333,560 shares of restricted common stock to CIC Resources
Inc. pursuant to the SPOA at a deemed issuance price of $0.8985 per share. We relied
on exemptions from registration under the Securities Act provided by Regulation S and/or
Section 4(a)(2) with respect to the issuance of these shares.

·

On
March 8, 2016, we issued an aggregate of 123,000 shares of restricted common stock to
two consultants in consideration for services under consulting agreements at a deemed
issuance price of $0.86 per share. We relied on exemptions from registration under the
Securities Act provided by Rule 506 of Regulation D and/or Section 4(a)(2) with respect
to the issuance of these shares to one consultant and on exemptions from registration
under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect
to the issuance of these shares to the other consultant.

·

On
March 29, 2016, we issued an aggregate of 138,000 shares of restricted common stock to
two consultants in consideration for services under consulting agreements at a deemed
issuance price of $0.74 per share. We relied on exemptions from registration under the
Securities Act provided by Rule 506 of Regulation D and/or Section 4(a)(2) with respect
to the issuance of these shares to one consultant and on exemptions from registration
under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect
to the issuance of these shares to the other consultant.

·

On
April 1, 2016, we issued an aggregate of 36,363 shares of restricted common stock to
two consultants in consideration for services under consulting agreements at a deemed
issuance price of $1.10 per share. We relied on exemptions from registration under the
Securities Act provided by Rule 506 of Regulation D and/or Section 4(a)(2) with respect
to the issuance of these shares to one consultant and on exemptions from registration
under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect
to the issuance of these shares to the other consultant.

48

Item 3. Defaults
Upon Senior Securities

None.

Item 4. Mine
Safety Disclosures

Pursuant to Section 1503(a) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), issuers that are operators, or that
have a subsidiary that is an operator, of a coal or other mine in the United States, and that is subject to regulation by the
Federal Mine Safety and Health Administration under the Mine Safety and Health Act of 1977 (“Mine Safety Act”), are
required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations,
orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended April 30,
2016, the Company’s Palangana Mine was not subject to regulation by the Federal Mine Safety and Health Administration under
the Mine Safety Act.

Item 5. Other
Information

None.

Item 6. Exhibits

The following exhibits are included with
this Quarterly Report on Form 10-Q: